IBANK 3.1.1 Introduction

(1) This Chapter sets out capital adequacy requirements.
(2) An Islamic banking business firm's total regulatory capital is the sum of its tier 1 capital and tier 2 capital. The categories and elements of regulatory capital, and the limits, restrictions and adjustments to which they are subject are set out in this Chapter.
(3) Capital supports the firm's operation by providing a buffer to absorb losses from its activities and, in the event of problems, it enables the firm to continue to operate in a sound and viable manner while the problems are resolved. Capital management must be an integral part of the firm's credit risk management process and must align the firm's risk tolerance and risk profile with its capacity to absorb losses.

Note For the governing body's responsibilities in relation to capital management and capital adequacy, see rule 3.1.3.
Derived from QFCRA RM/2015-2 (as from 1st January 2016).