Summary of Capital Requirement at Various Stages of the Contract
CA-3.2.24
The following table sets out the applicable period of the contract that attracts capital charges:
(a) Murabahah and Non-binding MPOApplicable Stage of the Contract Credit RW Market Risk Capital Charge Asset available for sale (asset on balance sheet)* Not applicable Price risk (15% Capital charge) Asset is sold and delivered to a customer and the selling price (accounts receivable) is due from the customer. Based on customer's rating or 100% RW for unrated customer (see paragraphs CA-3.2.11 and CA-3.2.12) NA Upon full settlement of the purchase price. NA NA * Also includes an asset which is in possession due to cancellation of PP by a non-binding MPO customer. Any HJ taken, if any, is not considered as eligible collateral and shall not be offset against the value of the asset.
(b) Binding MPOApplicable Stage of the Contract Credit RW Market Risk Capital Charge Asset available for sale (asset on balance sheet)* - If the bank has legal right to recoup from the customer any loss on disposing of the asset Asset acquisition cost less [market value of asset if eligible as collateral (net of any haircut**) plus any HJ] x applicable RW (see chapter CA-4) NA Asset available for sale (asset on balance sheet)* - If the bank has no legal right to recoup from the customer any loss on disposing of the asset NA Price risk 15% Capital charge minus HJ(if the bank has legal right to the HJ) Asset is sold and delivered to a customer and the selling price (accounts receivable) is due from the customer. Based on customer's rating or 100% RW for unrated customer (see section CA-4.2) NA Upon full settlement of the purchase price. NA NA * Also includes an asset which is in possession due to cancellation of PP by a customer.
** Please refer to CRM section CA-4.7 for eligibility of collateral and application of haircuts.
Amended: April 2011
April 2008
