Regulatory Alerts2025-10-06
Added · Updated
Instructions for Classification and Treatment of Ijarah Muntahia Bittamleek at Licensed Islamic Banks
These instructions establish new classification and impairment provision rules for Ijarah Muntahia Bittamleek (IMB) at licensed Islamic banks, effective from December 1, 2025. Lease installment receivables overdue for 30-89 days require a 50% impairment provision, increasing to 100% for those overdue by 90 days or more. If non-performing IMB receivables have modified contractual terms, reclassification or reversal of provisions is prohibited for a minimum 6-month probation period, during which revenues and commissions must be suspended. Banks are also prohibited from increasing existing exposures for clients with non-performing IMB receivables and must classify all other client accounts as non-performing if IMB receivables meet this definition. The instructions also mandate quarterly reporting to the Central Bank and repeal previous IMB classification and treatment instructions No. (60/2014).