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  • CA-2.1 CA-2.1 Introduction

    • CA-2.1.1

      Islamic banks are allowed two types of own funds to meet their capital requirements for credit risk and market risk, as set out below:

      — Tier 1: Supports the calculation of credit risk weighted assets and at least 28.57% of market risk.
      — Tier 2: Supports credit risk and market risk subject to limitations.

    • CA-2.1.2

      For the purpose of calculating its Capital Adequacy Ratio (CAR), the risk-weighted assets of an Islamic bank consist of the sum of the risk-weighted assets financed by the Islamic bank's own capital and liabilities, plus 50% of the risk-weighted assets financed by the Islamic bank's PSIA. This applies to both unrestricted PSIA that are accounted for on the Islamic bank's balance sheet and restricted PSIA that are accounted for off the balance sheet.