Islamic finance

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The COVID-19 Pandemic: Supervisory Implications and Priorities for Islamic Banking

TC Note considers implications of COVID-19 as it affects Islamic finance

Toronto Centre Note discusses seven potential implications and priorities for supervisors regulating Islamic banks in response to the COVID-19 pandemic in dual banking systems: i) ensuring supervisory transparency, clarity in regulatory interventions, and a level playing field for Islamic banks; ii) navigating a tricky trade-off between regulatory capital requirements and economic growth; iii) managing Islamic banks' asset quality and the treatment of moratoria and non-performing financing; iv) dealing with a liquidity crunch and providing Shariah-compliant liquidity support and lender-of-last-resort facilities; v) providing supervisory support for issuing sovereign Sukuk for fiscal deficits; vi) evaluating stress testing and credit quality; and vii) reviewing financial safety nets and insolvency regimes for Islamic banks.

Publisher: Toronto Centre Release date: May 2020

Type: TC Notes

Topics: Crisis management and contingency planning, Islamic finance, Stress-testing, COVID-19

Sectors: Banking

Shariah Compliance Function

AAOIFI standard for creating and managing a Shariah compliance function

Accounting and Auditing Organization for Islamic Financial Institutions standard provides guidance for establishing and managing a robust Shariah compliance function within Islamic Financial Institutions (IFIs) and for standardizing the practices across the globe. Includes guidelines on establishing the Shariah compliance function with regard to the responsibilities and key considerations, along with the internal controls and processes within IFIs. Also details structure, scope and functioning of a Shariah compliance department, key functions and reporting lines.

Publisher: International Organizations Release date: Nov 2018

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Compliance function

Sectors: Banking, Insurance, Securities

Shariah Compliant Liquidity Facilities: Establishing a Fund Based Deposit Facility

BoE proposal for a Shariah-compliant central bank liquidity facility

Bank of England consultation proposes the operational details on how its fund-based Shariah compliant deposit facility would work in practice.

Publisher: National Regulators Release date: Apr 2017 Country: United Kingdom

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Liquidity risk and rules

Sectors: Banking

Deadline for comments: May 2017

Ensuring Financial Stability in Countries with Islamic Banking

IMF policy paper examines financial stability implications of Islamic banking

International Monetary Fund policy paper examines principal features of Islamic banking models, the risks they present, and approaches that countries have taken in addressing them. Discusses key elements of relevant international standards, the progress that has been made in their development, and gaps that remain to be addressed.

Publisher: International Organizations Release date: Feb 2017

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Supervisory framework, Recovery and resolution, Corporate governance, Liquidity risk and rules

Sectors: Banking

Global Report on Islamic Finance 2016

WB and IDBG report on how Islamic finance can promote inclusive and sustainable socioeconomic development

World Bank and Islamic Development Bank Group report provides comprehensive overview of existing status of various Islamic finance sectors and identifies major challenges hindering growth of Islamic finance. Identifies policy interventions and tools for policymakers to leverage the principles of Islamic finance in an effort to eradicate extreme poverty and work toward a more equitable distribution of wealth. Islamic finance, built on a foundation of social and economic justice, can contribute to shared prosperity through the principles of inclusive participation and risk sharing.

Publisher: International Organizations Release date: Oct 2016

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Financial inclusion

Sectors: Banking, Insurance, Securities

Islamic Finance and Anti-Money Laundering and Combating the Financing of Terrorism

IMF discussion of money laundering and terrorist financing risks associated with Islamic finance

International Monetary Fund working paper discusses potential money laundering and terrorist financing risks associated with Islamic finance and potential applicability of international standards. Discusses differences between conventional and Islamic finance and potential implications for AML/CFT regimes. Paper: i) reviews key characteristics of Islamic financial institutions and products; ii) discusses how Financial Action Task Force's FATF3 standard addresses money laundering and terrorist financing; iii) looks at money laundering and terrorist financing risks specific to Islamic finance; iv) considers how FATF standards apply to Islamic finance; and v) provides policy recommendations.

Publisher: International Organizations Release date: Feb 2016

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Money laundering and terrorist financing

Sectors: Banking

Establishing Shariah Compliant Central Bank Liquidity Facilities

BOE feasibility study on establishing deposit and liquidity insurance facilities on Sharia compliant basis

Bank of England consultation on establishing Sharia compliant liquidity facilities. Identifies two possible models for establishing Sharia compliant central bank deposit facility: i) wakalah fund based arrangement; and ii) commodity murabaha. Also identifies two possible models for providing liquidity insurance to Islamic banks: i) collateralizing commodity murabaha liquidity insurance model; and ii) sale and buy back (also known as Sharia compliant repo). Primary focus is on establishment of deposit facility.

Publisher: National Regulators Release date: Feb 2016 Country: United Kingdom

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Liquidity risk and rules

Sectors: Banking

Deadline for comments: Apr 2016

Issues in Regulation and Supervision of Microtakaful (Islamic Microfinance)

IAIS and IFSB paper provides insights on issues arising from Microtakaful practices

International Association of Insurance Supervisors and Islamic Financial Services Board joint paper studies various types of Microtakaful models, supervisory frameworks and prevalent issues faced by Microtakaful providers and regulatory and supervisory authorities. Identifies current practices and models for offering Microtakaful products, and challenges and potential issues in offering them to target customers. Reviews current regulatory framework for Microtakaful sector in various jurisdictions and suggests initiatives to strengthen it and enhance financial inclusion through Takaful sector. Provides guidance to regulatory and supervisory authorities in implementing an enabling environment for development and growth of Microtakaful sector.

Publisher: Global Standard-Setting Bodies Release date: Nov 2015

Type: Consultative, discussion and issues paper

Topics: Islamic finance, Corporate governance, Risk management, Capital adequacy, Transparency and disclosure, Supervisory framework

Sectors: Microinsurance

Resolution Frameworks for Islamic Banks

IMF working paper on applicability of FSB Key Attributes to the resolution of Islamic banks

International Monetary Fund working paper examines key applicability of FSB Key Attributes of Effective Resolution Regimes for Financial Institutions to the resolution of Islamic banks. Concludes that several issues need to be addressed, owing to Islamic banks' unique governance structures and balance sheets. Recommends international guidance for the design of robust Sharia-compliant resolution frameworks for jurisdictions with Islamic banks.

Publisher: International Organizations Release date: Nov 2015

Type: Consultative, discussion and issues paper

Parent: Key Attributes of Effective Resolution Regimes for Financial Institutions

Topics: Islamic finance, Recovery and resolution

Sectors: Banking

An Overview of Islamic Finance

IMF overview of key policy issues and challenges facing practitioners and policy makers

International Monetary Fund working paper provides overview of Islamic finance, discusses key macroeconomic implications from its expansion across the globe, and provides broad perspective on key elements of Islamic finance and banking. Provides summary of fundamentals of Islamic finance and describes key instruments. Discusses growth of Islamic finance industry and key drivers, and provides comparison between Islamic and conventional financial systems.

Publisher: International Organizations Release date: Jun 2015

Type: Consultative, discussion and issues paper

Topics: Risk management, Macroprudential, Systemic risk, Liquidity risk and rules, Islamic finance

Sectors: Banking, Insurance, Securities

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Resources

382 records

The COVID-19 Pandemic: Supervisory Implications and Priorities for Islamic Banking

Shariah Compliance Function

Shariah Compliant Liquidity Facilities: Establishing a Fund Based Deposit Facility

Ensuring Financial Stability in Countries with Islamic Banking

Global Report on Islamic Finance 2016

Islamic Finance and Anti-Money Laundering and Combating the Financing of Terrorism

Establishing Shariah Compliant Central Bank Liquidity Facilities

Issues in Regulation and Supervision of Microtakaful (Islamic Microfinance)

Resolution Frameworks for Islamic Banks

An Overview of Islamic Finance

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