IBANK 4.6.9 When Physical Assets may be Eligible Collateral

(1) An Islamic banking business firm may accept as eligible collateral, by way of pledge, a specified asset that can be lawfully owned, and is saleable and deliverable. The pledge must be enforceable and the asset must be free of encumbrance.

Note In an ijarah contract, the underlying asset is not eligible collateral for purposes of credit risk mitigation, see rule 4.5.6(3).
(2) A physical asset accepted as eligible collateral must be valued depending on whether there is an active market for the asset. If there is such a market, the asset must be valued at least once a month.
(3) If there is no active market for the asset, it must be valued:
(a) each time there is a significant change in the market in which the asset operates; and
(b) each time there is a significant change in the condition of the asset.
Derived from QFCRA RM/2015-2 (as from 1st January 2016).