Regulatory Alerts2023-10-14
Additional Requirements on Capital Adequacy for Shari’ah Compliant Banking
The Saudi Central Bank (SAMA) has issued additional capital adequacy requirements mandating domestic banks operating Shari’ah compliant banking to apply specific prudential treatments for credit and market risks. The framework provides detailed risk-weighting rules across various contract stages for key Islamic financing instruments, including Murabahah, Tawarruq, Salam, Istisna’, and Ijarah. These requirements align Islamic banking exposures with SAMA’s existing Basel framework and take effect on January 1, 2024.
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