Regulatory Alerts2009-07-20
Added · Updated
Risk Factors Relating to Islamic Mode of Investment under Risk Based Capital Adequacy for Banks
All Islamic banks and Islamic branches of conventional banks in Bangladesh must identify risks relating to investments made under Islami Shariah based banking and submit Risk Based Capital Adequacy (RBCA) statements to the Department of Offsite Supervision starting from the June 2009 quarter. The document establishes a separate chapter detailing capital charges for credit, market, and operational risks associated with specific Islamic financing instruments such as Murabaha, Salam, Istisna, Ijara, Musharaka, and Mudaraba. It mandates that banks measure credit risk using the Standardized Approach of Basel II and apply specific capital charges, including 10% for equity positions and Sukuk, and 15% for commodity inventory directional risk.
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