CA-A.2 CA-A.2 Purpose
CA-A.2.1
The purpose of this module is to set out the Agency's
capital adequacy regulations and provide guidance on the risk measurement for the calculation of capital requirements by banks referred to under CA-A.1.1.CA-A.2.2
The module also sets out the minimum gearing requirements which relevant banks (referred to in section CA-A.1) must meet as a condition of their licensing.
CA-A.2.3
The Agency requires in particular that the relevant banks maintain adequate capital, in accordance with the Regulation in this module, against their risks as capital provides banks with a cushion to absorb losses without endangering customer accounts. Due to this, the Agency also requires the relevant banks to maintain adequate liquidity and identify and control their large credit
exposures that might otherwise be a source of loss to a licensee on a scale that might threaten its solvency.CA-A.2.4
The regulations contained in this section are consistent in all substantial respects with the approach recommended by the Basel Committee on Banking Supervision and the Statement on the Purpose and Calculation of the Capital Adequacy Ratio for Islamic Banks issued by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
CA-A.2.5
The Agency recognises that the Basel Committee guidelines may not address specific characteristics of the various products and services offered by Islamic banks. Therefore, the Agency has adopted a risk-based approach and has tailored the regulations to address the specific risk characteristics for Islamic banks.
CA-A.2.6
This module provides support for certain other parts of the Rulebook, mainly:
(a) Licensing and Authorisation Requirements;(b) BMA Reporting Requirements;(c) Credit Risk Management;(d) Market Risk Management;(e) Operational Risk Management;(f) Liquidity Risk Management;(g) High Level Controls:(h) Relationship with Audit Firms;(i) Enforcement; and(j) Penalties and Fines.
