The new Collateralised Murabaha Facility is expected to complement a previous conventional facility in case banks face the same kind of shortages in cash.
According to the central bank, starting April, the eligible collateral would be extended to include Sharia-compliant securities other than the Islamic certificate of deposits issued by it.
In July last year, the Interim Margin Lending Facility was introduced as part of efforts to bolster the financial system.
The facility was introduced by the central bank following consultations with the UAE Banks Federation.
The eligible assets that can be used as collateral include bonds, sukuk and securities that are issued by the UAE Federal Government or authorities in individual emirates, The National reported.
Securities issued by foreign governments, banks, corporates as well as supranational agencies will also be considered, provided they have a minimum long-term credit A rating from agencies.
The Central Bank of the UAE is responsible for managing the currency, monetary policy and banking regulation and was established on 19 May 1973 as the United Arab Emirates Currency Board.
The primary purpose of the UAE Currency Board was to issue an independent currency for the new state to replace the existing currencies, the Qatari riyal and the Bahraini Dinar, that are in use.
Image: The Central Bank of the UAE main building in Abu Dhabi. Photo: courtesy of Achilver
