Issues on Islamic banks’ Nostro accounts
All Islamic banks in Malaysia which involve with the international trade transaction will have to have a Nostro accounts with a conventional correspondent/agent banks in order to make payments through them. The objective of this study is to clarify the issue on the usage of Nostro accounts in con...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Universiti Teknologi MARA
2013
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/63317/1/63317_Issues%20on%20Islamic%20Banks%E2%80%99%20Nostro%20Accounts.pdf http://irep.iium.edu.my/63317/ http://www.myjurnal.my/public/browse-journal-view.php?id=442 |
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| Summary: | All Islamic banks in Malaysia which involve with the international trade transaction will have
to have a Nostro accounts with a conventional correspondent/agent banks in order to make
payments through them. The objective of this study is to clarify the issue on the usage of
Nostro accounts in conventional banks by the Islamic banks where these accounts deal with
riba (interest) in their daily transactions from the Shariah perspective. This study adopts the
qualitative method as the main research methodology. The information on the involvement of
12 Islamic banks in Malaysia with Nostro accounts in conventional banks is gained from
semi-structured interviews conducted with bankers who directly involved with international
trade payments. As a result, this study discovered two main issues. First is the issue on the
permissibility of the involvement of the Islamic banks with the Nostro accounts. While the
second issue is the tendency of some Islamic banks leverage on the conventional parents’
banks Nostro accounts. This study analyzes these issues by determining whether they are in
line with Shariah principles. |
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