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  • Summary of Capital Requirement at Various Stages of the Contract

    • CA-3.5.23

      The following tables set out the applicable period of the contract that attracts capital charges:

      Operating Ijarah

      Applicable Stage of the Contract Credit RW Market Risk Capital Charge
      Asset available for lease (prior to signing a lease contract) - If the bank has legal right to recoup from the customer any loss on disposing of the asset Binding PL Asset acquisition cost less (a) market value of asset fulfilling function of collateral (net of any haircuts) and (b) any 'hamish jiddiyyah' multiply with the customer's rating or 100% RW for unrated customer. (See section CA-4). Non-binding PL 15% capital charge until lessee takes possession.
      Asset available for lease (prior to signing a lease contract) - If the bank has no legal right to recoup from the customer any loss on disposing of the asset NA 15% capital charge until lessee takes possession minus urbun (If the bank has legal right to it).
      When the lessee gets the right to use the asset and the lease rental payments are due from the lessee Total contractual obligation of the lease rental receivable over the duration of the lease contract less the recovery value* (if eligible) of the leased asset shall be risk-weighted according to the lessee's rating. (100% RW for an unrated lessee.). (See chapter CA-4). The residual value will be subject to capital charge of 8%
      Maturity of contract term and the leased asset is returned to the bank Not applicable 15% capital charge of the carrying value of the asset

      * Recovery value should be based on the entire Ijarah asset value.

      IMB

      Applicable Stage of the Contract Credit RW Market Risk Capit Charge
      Asset available for lease (prior to signing a lease contract) - If the bank has legal right to recoup from the customer any loss on disposing of the asset Binding PL Asset acquisition cost less (a) market value of asset fulfilling function of collateral (net of any haircuts) and (b) any 'hamish jiddiyyah' multiply with the customer's rating or 100% RW for unrated customer. (See chapter CA-4). Non-binding PL 15% capital charge until lessee takes possession
      Asset available for lease (prior to signing a lease contract) - If the bank has no legal right to recoup from the customer any loss on disposing of the asset NA 15% capital charge until lessee takes possession minus urbun (If the bank has legal right to it).
      When the lessee gets the right to use the asset and the lease rental payments are due from the lessee Total contractual obligation of the lease rental receivable over the duration of the lease contract less recovery value of the asset* (if eligible) shall be risk-weighted according to the lessee's rating (100% RW for an unrated lessee. (See chapter CA-4). Not applicable
      Maturity of contract term and the leased asset is returned to the bank Not applicable Not applicable

      * Recovery value should be based on the entire Ijarah asset value.

      Apr 08