Kuala Lumpur, February 14, 2006 – The Islamic Financial Services Board (IFSB) has recently published two prudential standards on Risk Management and Capital Adequacy for institutions (non-insurance institutions) offering only Islamic financial services (IIFS). These publications represent a significant advancement towards consistent implementation of measuring minimum capital adequacy requirements taking into account the specificities of Shari’ah rules and principles inherent in the IIFS products and services.
The promulgation of the Standards marks a milestone for the IFSB, an international standard- setting body of global regulatory and supervisory authorities that have vested interest in ensuring the soundness and stability of the Islamic financial services industry. The Standards, while not binding, represent a common understanding among the IFSB Council members of the minimum internal control and risk management processes in IIFS operations, which provide the basis for a uniformed and consistent approach to measure and manage risks at the broader level.
The Secretary General of the IFSB, Professor Rifaat Abdel Karim states, “Following the approval of the EDs by its Council in December 2005, the IFSB recommends that regulatory and supervisory authorities implement the standards effective 2007.” The Standards were initially issued as Exposure Drafts (ED) in March 2005 and were discussed in workshops and public hearings.
Both the Guiding Principles of Risk Management for Institutions (other than Insurance Institutions) Offering Only Islamic Financial Services and Capital Adequacy Standard for Institutions (other than Insurance Institutions) Offering Only Islamic Financial Services are available from the IFSB website http://www.ifsb.org
