Regulatory Alerts2021-12-29 | 131859Procedure for Accounting for Murabaha Transactions
The National Bank of the Kyrgyz Republic issued this Procedure to establish accounting and income recognition rules for Murabaha transactions conducted by banks operating under Islamic finance principles. It mandates that banks measure assets intended for Murabaha sales at cost or fair value depending on client obligations, recognize receivables and deferred markup upon sale, and apply the effective interest rate method for profit recognition. Additionally, the regulation requires banks to establish impairment reserves, suspend income accruals for non-performing exposures, and disclose detailed portfolio metrics to ensure transparency and compliance with AAOIFI standards.
Share