Association of Islamic Banking Institutions Malaysia

CMMA to boost Islamic money market Print E-mail
Friday, 21 August 2009
THE Corporate Murabahah Master Agreement (CMMA), a standard document for deposit taking between financial institutions and corporate customers, was launched in Kuala Lumpur today, in a move to boost the Islamic money market.
Association of Islamic Banking Institutions Malaysia (AIBIM) President, Datuk Zukri Samat described the launch as timely as it would unlock the vast potential of the domestic Islamic money market.

He said the average daily transactions is estimated to top RM6 billion, as such, CMMA could assume a significant role in raising the innovation level of deposit products.

"The adoption of the CMMA for corporate deposits is expected to result in cost and resource savings for both Islamic banks and corporations," Zukri said during the launch of the master agreement in conjunction with the Malaysian Corporate Conference 2009.

AIBIM also signed a memorandum of understanding with Takaful Malaysia, ACR Retakaful, Astro, Maesat and the Employees Provident Fund to participate in CMMA.

Zukri said the standard agreement would specify a common modus operandi for Islamic financial institutions in accepting deposits via commodity Murabahah.

"It will help eliminate the need for corporate customers to vet through each and every agreement proposed by different Islamic financial institutions on the same product.

"The agreement will also provide certainty and standard methodology in ensuring principal and profit due to corporate depositors," Zukri explained.

Being fundamentally a deposit-taking product, the Murabahah arrangement naturally involves two main parties, namely the Deposit Placing Entity (DPE) and the Deposit Taking Entity (DTE).

The DPE or the principal is a company or corporation which intends to place its surplus funds with the bank. Conversely, the DTE is the bank itself.

The purchase by the bank, in its capacity as the agent of the principal, will be effected upon spot payment and immediate delivery by suppliers. - Bernama
 
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