Regulatory Alerts2024-01-01
Instructions No. (3) of 2024 Regarding Capital Requirements for Profit-Sharing Financing Forms
The Palestine Monetary Authority issued Instructions No. (3) of 2024 to establish capital adequacy requirements for Islamic banks operating in Palestine, specifically targeting profit-sharing financing forms including Mudaraba and Musharaka. The regulations mandate specific credit risk weights—ranging from 100% to 400%—based on client listing status, credit ratings, and asset types, while granting a uniform 250% weight to designated agricultural, industrial, technological, and health sector projects. Furthermore, the Instructions require banks to segregate Mudaraba and Musharaka accounts within their banking books and implement dedicated risk monitoring procedures effective from the issuance date.
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