Doha, Qatar, Thursday, 14 December 2023
The QFC Regulatory Authority (“Regulatory Authority”) today issued a Consultation Paper on proposals to significantly update the Islamic Banking Business Prudential Rules 2015 (“IBANK”).
The proposed amendments to IBANK are set out in the Islamic Banking Business Prudential (Amendment) Rules 2024 and have been developed to achieve appropriate alignment with the Islamic Financial Services Board prudential standards for Islamic banks and certain parts of the Basel Framework set out in the standards of the Basel Committee on Banking Supervision (“BCBS”). In that connection, the Regulatory Authority is proposing to update IBANK in the following key prudential areas:
- capital adequacy requirements in relation to credit risk and market risk in respect of Shari’a compliant financing and investment instruments e.g., profit-sharing investment accounts and exposures relating to investments in sukuk, securitisations and real estate transactions;
- changes to the credit risk management framework;
- capital charge framework for counterparty credit risk (“CCR”) for Shari`a-compliant hedging instruments;
- guidance to categorise problem assets and provisioning;
- equity investments in Islamic investment funds;
- the large exposures framework; and
- the allocation of instruments to the banking book and trading book.
Given the significant update to IBANK, the Regulatory Authority is proposing a consultation period of three months to provide sufficient time for Islamic QFC banks to review the proposals. The Regulatory Authority is seeking to assess the impact of these proposals on Islamic QFC banks and will also be available to meet on a one-to-one basis with any Islamic QFC banks wishing to discuss the consultation proposals.
It is proposed that the updated final IBANK commences on 1 July 2024.
You are invited to submit your comments by 16 March 2024.
Please click here to access the Consultation Paper and the draft Rules.
