Tripoli: The Central Bank of Libya (CBL) has launched absolute Mudaraba Certificates of Deposit (CDs) as an innovative investment tool designed to employ liquidity among banks, institutions, and individuals, adhering to Sharia and accounting standards.
According to Libyan News Agency, the CBL announced that the CDs will be available from October 12 to 31, with maturity options of 91, 182, and 365 days. This initiative aligns with the CBL’s ongoing efforts to develop monetary policy tools that comply with Islamic Sharia principles.
The CBL clarified that these CDs are structured around a Sharia-compliant Mudaraba contract, where commercial banks serve as the principal, and the CBL acts as the mudarib, responsible for investing the funds.
The Central Bank also noted that the subscription contracts underwent review by the Central Sharia Supervisory Board, with input from experts of the Islamic Development Bank and a specialized project advisor, to ensure adherence to Sharia and accounting standards.
The CBL emphasized that commercial banks must obtain approval from their Sharia Supervisory Boards for the contracts and subscription forms for these certificates. The expected annual return outlined in the issuance documents is an indicative estimate of potential investment performance, not a binding promise or contractual obligation. Profit distribution will be based on actual investment outcomes, with no obligation for the bank to pay predetermined profits.
As per the statement, the Central Bank complies with Sharia Mudaraba provisions in profit distribution and loss bearing, without guaranteeing capital or profits. It applies risk management policies aligned with best practices to safeguard funds and meet investment goals.
Additionally, the statement highlighted that the certificates of deposit are under the Central Sharia Supervisory Board’s oversight throughout all stages, from design and issuance to contracts and distribution, while the Banking and Monetary Supervision Department ensures adherence to Sharia and banking standards.