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View all search resultsSharia reverse repo offered to absorb liquidity
JAKARTA: Bank Indonesia (BI) says it is offering reverse repo for sharia banks and business units to reduce bank liquidity in the financial system
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J
AKARTA: Bank Indonesia (BI) says it is offering reverse repo for sharia banks and business units to reduce bank liquidity in the financial system.
Reverse repo transactions require banks to purchase at least Rp 1 billion (US$110,000) of government sukuk from the central bank and receive margins when they buy back at an agreed price after a specified time period, BI said in a statement published on its website on Tuesday.
The new mechanism, which went into effect on Dec. 1, is aimed at absorbing the liquidity of sharia banks, specifically of banks with finance-to-deposit ratios of at least 80 percent and those that participate in BI’s sharia monetary operation.
The government’s sukuk market is currently dominated by local banks and insurance firms, with only 6 percent of government sukuk held by international funds.
