The aim of the draft document is to align the Shari’ah compliant board’s capital adequacy standard (IFSB-15) with global capital standards, particularly the Basel III final reforms.
Tuesday 05, November 2019 BY KUDAKWASHE MUZORIWA
The Islamic Financial Services Board (IFSB) has issued the Exposure Draft on Revised Capital Adequacy Standard for Institutions Offering Islamic Banking Services (ED-RCAS) for public consultation for a period starting from 4 November 2019 to 02 January 2020.
The IFSB is inviting comments from central banks, regulatory and supervisory authorities as well as international organisations, Institutions offering Islamic Financial Services (IIFS) and academics.
The ED-RCAS made several enhancements to the IFSB-15 with the aim of making it more comprehensive and robust in line with global practice in terms of regulatory capital adequacy framework for institutions offering Islamic banking services.
The incorporation of the global practices in the standard will ensure the provision of a level playing field to IIFS vis-à-vis the conventional financial institutions subjected to capital regulatory framework said the IFSB.
The standard seeks to assist the IIFS and their supervisory authorities in the implementation of a capital adequacy framework that will ensure effective coverage of risk exposures of the IIFS and allocation of appropriate capital to cover these risks, thus enhancing the resilience of the IFSI.
Additionally, ED-RCAS also address some specific concerns in the course of implementation of the earlier IFSB capital adequacy standards and guidance notes.