Regulatory Alerts2022-10-26
Added
BRPD Circular Letter No. 42: Ensuring pre-finance facilities for providing working capital to the affected large Industries and Service sector by the outbreak of Novel Corona Virus (Covid-19) through Restricted Mudaraba Term Deposit
The document amends previous circulars to allow Shariah-based banks and financial institutions to provide working capital to large industries and the service sector affected by the COVID-19 outbreak through a pre-finance mechanism using Restricted Mudaraba Term Deposits. It replaces previous liquidity provision rules by requiring these institutions to invest 50% of their own funds immediately and apply for pre-finance approval for the remaining 50% within 10 working days of receiving consent. The profit rate for this facility is set at 9%, with 1% retained by the bank as Mudaraba Management Fee and the remainder split equally between the Mudarib and the Sahib-ul-Maal, while capital loss provisions and compensation for negligence are also specified.