A Shari’a-compliant reference rate for the cost of funding in Islamic money markets. Islamic finance prohibits interest (riba) and shuns dealing or transacting in interest-based products and instruments as such are viewed inconsistent with the principles of Islam. In essence, IIBR used to provide a Shari’a-acceptable alternative to LIBOR or any similar interest-based indexes, as it takes into account the “profit rate” that a contributor panel of Islamic banks and Islamic banking windows would perceive to be reasonable for Shari’a- compliant funding with reasonable market size.

In calculating the rate, contributions from up to 16 major Islamic bank and Islamic banking windows were received in order to reach at the average expected cost of short term interbank funding for the Islamic banking and finance industry. This benchmark was used for pricing overnight to short-term treasury investment and financing instruments such as Mudaraba, Murabaha and Wakala, and retail financing instruments such as asset financing (property, cars, consumer products, etc). IIBR was also used as a benchmark for corporate finance and investment assets, sukuk and Shari’a compliant fixed income instruments, etc.

IIBR was usually published at 11:00 a.m. (Makkah Time) every business day in the Arabian Gulf states (Sunday- Thursday), except for the two Muslim Eids (festivals), i.e. the Greater Eid (the 10th of Dhul Hijjah) and the Lesser Eid (the 1st of Shawwal), in addition to the New Year Day (the 1st of January).