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The IFSB to Organise a Roundtable to Discuss Exposure Draft-23 on Revised Capital Adequacy Standard for Institutions Offering Islamic Financial Service (Banking Segment)

Date posted: 2 December 2019

2 December 2019, Kuala Lumpur - The inaugural Islamic Financial Service Board (IFSB) is organising a “Roundtable to Discuss Exposure Draft-23 on Revised Capital Adequacy Standard for Institutions offering Islamic Financial Service [Banking Segment]” on 13 December 2019 in Kuala Lumpur, Malaysia which will be chaired by Bank Negara Malaysia.

The Roundtable plans to discuss the issues contained in the recently issued IFSB Exposure Draft-23 (ED-23) which aims to provide the regulatory and supervisory authorities (RSAs) and market players of the Islamic Banking Industry guidance relating to capital adequacy requirements. The draft document has been developed through extensive discussions by an IFSB Working Group comprising of 25 members from regulatory and supervisory authorities, international and multilateral organizations, representing various members of the IFSB.

As an important component of the IFSB due process in issuing its Standards and Guiding Principles, the IFSB is organising a Roundtable Discussion on ED-23 to invite greater engagement and garner feedback and comments from key industry stakeholders on the Exposure Draft prior to its final submission to the Council. 

This Exposure Draft aligns the IFSB capital adequacy standard (IFSB-15) with global capital standards, particularly the Basel III final reforms and the latest development in the Islamic Financial Services Industry. The ED-23 made several enhancements to the IFSB-15 with the aim of making it more comprehensive and robust and in tune with global best practice in terms of regulatory capital adequacy framework for institutions offering Islamic banking services. 

The incorporation of the global best 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. The ED-23 provides enhanced guidance to the RSAs and with the necessary flexibility for its application across regions and on small to fairly large and sophisticated IIFS.

The main objectives of this Standard are to:

  1. provide an updated framework for regulatory capital components for IIFS, that comply with Sharīʻah and Basel
  2. set out the methodologies and norms for identifying and measuring risks in Sharīʻah compliant products and services and in assigning risk weights
  3. enhance the capital adequacy treatment of IIFS exposures relating to ṣukūk in line with the current global regulatory standards and the development in the IFSII
  4. Delineates and enhance the guidance on the application of macro prudential measures for IIFS.

The structure of the Roundtable has been designed in a way that the Project Team will provide a brief presentations on the enhancements made to the IFSB-15 and highlight the areas that requires feedback from the stakeholders. There will be 3 speakers and each will present their observations and comments on the ED-23 and other participants of the roundtable can further comments and ask questions during the open session. This Roundtable is open to all regulators, industry players, supervisory authorities, industry experts and interested members of the public around the globe. 

For more information and to register your participation, please contact the IFSB Secretariat; Mrs Ida Shafinaz Ab. Malek at ida.shafinaz@ifsb.org or visit the IFSB website, https://www.ifsb.org/register_online.php?act=addnew&e_id=416

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