12 December 2019, Dhaka, Bangladesh – The Council of the Islamic Financial Services Board (IFSB) has resolved to approve the adoption of two new standards in its 35th Meeting of the IFSB Council in Dhaka, Bangladesh.
The two new standards are:
TN-3: Technical Note on Financial Inclusion and Islamic Finance
The aim of TN-3 is to provide guidance on good practices in regulating the financial sector to enhance financial inclusion through Islamic finance, while also considering proportionality in balancing the benefits of regulation and supervision against the risks and costs. TN-3 underscores the importance of financial inclusion, due to its intricate connection with economic growth, shared prosperity and poverty reduction, while furthering an understanding of how financial inclusion policies and regulatory initiatives can support Islamic microfinance / savings / investment activities.
TN-3 also covers recent developments in enhancing financial inclusion through digital finance and financial technology (FinTech) platforms while further identifying the current main challenges and emerging issues, as experienced by the market players and regulators, in microfinance and financial inclusion related to Islamic financial services. Finally, TN-3 explores practical modalities for the integration of social finance modes in Islamic finance with the commercial IFSI to promote financial inclusion.
In particular, the objectives of TN-3 include:
The scope of TN-3 includes the banking sector as well as the non-bank financial institutions and the Islamic capital market in promoting financial inclusion, where needed.
GN-7: Guidance Note on Sharī`ah-compliant Lender-of-Last-Resort Facilities
The aim of GN-7 is to complement existing IFSB guidance on Sharī`ah-compliant lender of last resort (SLOLR) and to offer international benchmark guidelines to regulatory and supervisory authorities (RSAs) for developing and offering SLOLR facilities as part of the financial safety net arrangement for IIFS in their jurisdictions. Specifically, GN-7 covers the following:
GN-7 is primarily intended to serve as a benchmark for Central Banks (CBs) in establishing and operationalising an SLOLR framework that applies to full-fledged Islamic commercial banks and Islamic commercial banks that are subsidiaries of conventional banks. Among the areas highlighted above, the GN considers several essential features of an SLOLR arrangement, including eligibility criteria to access SLOLR; a non-exhaustive set of Sharī`ah-compliant structures and mechanisms that CBs could utilise for SLOLR purposes; the applicability of punitive rates to these mechanisms; Sharī`ah-compliant eligible collateral; and the relevant disclosures to be made by CBs to IIFS in their jurisdictions.
The softcopies of TN-3 and GN-7 will be available on the IFSB website, www.ifsb.org in both English and Arabic languages in due course.
The 35th meeting of the IFSB Council, hosted by Bangladesh Bank, was held on 11 December 2019 in Dhaka, Bangladesh. The Council Meeting was chaired by H.E. Fazle Kabir, the Governor of Bangladesh Bank and Chairman of the IFSB Council for 2019, attended by central bank Governors and Deputy Governors of regulatory and supervisory authorities and senior representatives from among the Council and Full members of the IFSB.
Media contact
Nirvana Jalil Ghani
(603) 9195 1426
nirvana@ifsb.org
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad