PORT LOUIS (Reuters) - Mauritius plans to offer sharia-compliant short-term liquidity tools within months as the Indian Ocean island seeks to become a new player in Islamic financing, the central bank governor said on Wednesday.
Mauritius, best known as a luxury-holiday destination, has developed its offshore banking sector in recent years and now wants to tap into the $1 trillion Islamic finance industry, seen as a major area of potential growth.
“We are looking to try to help ... manage short-term liquidity for Islamic operators because our current system is interest based which is not sharia compliant,” governor Rundheersing Bheenick told Reuters.
“We are targeting global Islamic financial markets and this is a rapidly developing business,” he said.
Mauritius sees Sukuk, or Islamic bonds, as a way to mop up excess liquidity in the market and possibly to raise finance for government expenditure.
“We have identified Sukuk markets as one possible niche where we could develop a presence internationally,” he said.
The central bank will also look to the island’s nascent commodity exchange as a means to structure short-term liquidity management for Islamic financial operations, he said.
Bheenick said the central bank had issued Islamic banking licenses to HSBC, Deen Bank -- a joint venture between a local conglomerate and a third party from the Gulf -- and another Gulf group expected to launch operations by the end of the year.
He declined to give the names.
HSBC launched Mauritius’s first offshore Islamic branch in May, offering a current account and term investment account.
“We have double taxation agreements with about 34 other countries and that basically is our strength,” said Hajrah Sakauloo, HSBC vice president of business development.