National Shari'a Board - Indonesian Council of Ulama Fatwa No. 37 of 2002 on Interbank Financial Market Based on Shari'a Principles

This fatwa acknowledges that shari'a banks can experience a lack of liquidity due to either a difference in timeframe between receipt and depositing of funds, or collated funds not yet being able to be distributed to the relevant parties. Therefore, the fatwa states that, in order to improve fund management efficiency, banks that conduct activities pursuant to shari'a principles require an interbank financial market.

The fatwa specifies that an interbank financial market based on shari'a principles is one that conducts inter-participant short-term financial transactional activities based on shari'a principles. Eligible participants are shari'a banks as lenders or borrowers, or conventional banks as lenders.

Contracts that may be used in interbank financial markets based on shari'a principles are:

  1. Mudharabah (Muqaradhah)/Qiradh;
  2. Musyarakah;
  3. Qardh;
  4. Wadi'ah; and
  5. Al-Sharf.
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