• IBANK Part 10.1 IBANK Part 10.1 General

    • IBANK 10.1.1 Introduction

      (1) This Chapter sets out the minimum capital requirements to cover:
      (a) the credit risk and market risk arising from the holding, by an Islamic banking business firm, of sukuk in the banking book; and
      (b) the firm's other sukuk-related exposures arising from the firm being (or acting in the capacity of) an originator, issuer, provider of credit enhancement or provider of a liquidity facility in a securitisation.

      Note For credit risk arising from sukuk in the firm's trading book, Chapter 4 applies. For market risk arising from sukuk in the firm's trading book, Chapter 6 applies.
      (2) This Chapter also sets out the requirements for allowing capital relief to an Islamic banking business firm.
      Amended by QFCRA RM/2017-1 (as from 1st April 2017).

    • IBANK 10.1.2 Sukuk

      (1) Sukuk are certificates that represent a holder's proportionate ownership in an undivided part of an asset or pool of assets where the holder assumes all rights and obligations to the asset or pool.
      (2) The assets that may be the subject of sukuk include:
      (a) tangible assets (including istisna assets);
      (b) intangible assets;
      (c) financial assets;
      (d) usufructs (including ijarah lease assets);
      (e) services;
      (f) equity participation in business ventures (such as mudarabah and musharakah);
      (g) a pool of the kinds of assets mentioned in paragraphs (a) to (d); and

      Note The pooling of different kinds of assets allows for greater mobilisation of funds. For example, an SPE would be able to issue tradeable sukuk for financial assets that would not normally be tradeable on their own, if the SPE packages a pool made up of a proportion of financial assets.
      (h) any other asset approved in writing by the Regulatory Authority.
      (3) The assets that are the subject of sukuk must be Shari'a-compliant and readily identifiable. The assets may be in a specific project or investment activity that must itself be Shari'a-compliant.
      Inserted by QFCRA RM/2017-1 (as from 1st April 2017).

    • IBANK 10.1.3 IBANK 10.1.3 Tradeability of sukuk

      Sukuk are not tradeable unless their trading is in accordance with Shari'a.

      Inserted by QFCRA RM/2017-1 (as from 1st April 2017).

      • IBANK 10.1.3 Guidance

        1 As a general principle, sukuk with underlying financial assets solely in the form of receivables (debts) are not tradeable.
        2 Sukuk that are made up of financial assets may be traded by a firm if:
        (a) the financial assets are combined with tangible assets and the value of tangible assets in the pool is not less than the percentage determined by the firm's Shari'a supervisory board (this kind of sukuk is sometimes called sukuk al-istithmar); or
        (b) the firm is selling all of its assets (or a pool of assets with a standing financial obligation) and the financial assets are incidental to the tangible assets or usufructs being sold and are unavoidably included in the sale.
        Inserted by QFCRA RM/2017-1 (as from 1st April 2017).

    • IBANK 10.1.4 Categories of sukuk according to ownership of assets

      Sukuk may also be categorised, based on the sukuk holders' ownership of the underlying assets, into:

      (a) asset-backed sukuk where legal and beneficial ownership of the underlying assets are transferred to the sukuk holders; and
      (b) asset-based sukuk where only beneficial ownership of the underlying assets is transferred (through a trust) to the sukuk holders.
      Inserted by QFCRA RM/2017-1 (as from 1st April 2017).