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  • Types of Collateral

    • CA-4.7.27

      The types of collateral given in the next paragraph are eligible for relief in respect of the above CRM techniques.

      Apr 08

    • CA-4.7.28

      (a) Hamish jiddiyyah (security deposit) only for agreements to purchase or lease preceded by a binding promise.
      (b) Urbun
      (c) Profit sharing investment account or cash on deposit13 with the bank which is incurring the exposure
      (d) Sukuk rated by an external rating agency which is issued by:
      (i) Sovereigns and PSEs (treated as sovereigns) with a minimum rating of BB-;or
      (ii) Issuers other than the above, with a minimum rating of BBB- or A-3 / P-3.
      (e) Sukuk that is unrated by an ECAI but fulfill each of the following criteria:
      (i) Issued by an Islamic bank or a conventional bank or a sovereign;
      (ii) Listed on a recognised exchange;
      (iii) All other rated issues by the Islamic bank or conventional bank of the same seniority of at least BBB - or A-3/P-3 by a recognised ECAI, as determined by the CBB;
      (iv) The Islamic bank which incurs the exposure or is holding the collateral has no information to suggest that the issue would justify a rating below BBB- or A-3/P-3; and
      (v) The CBB is sufficiently confident about the market liquidity of the securities.
      (f) Equities and units in collective investment schemes.
      (g) Guarantees issued by third parties that fall within the following categories:
      (i) Sovereigns and central banks;
      (ii) PSEs;
      (iii) MDBs;
      (iv) International organisations/official entities with 0% RW
      (v) Islamic banks or conventional banks; and
      (vi) Corporate entities (including insurance and securities firms) either by the parent, subsidiary and affiliates, of a minimum rating of A-.
      (h) Leased assets as stated under "Leased assets used as collateral" above.
      (i) Collateral under "Murabaha" accepted by CBB (see paragraphs CA-3.2.10 and CA-3.2.14).

      13 Must be supported by an agreement or documentation that gives bank the right of set-off against the amount of receivables due.

      Amended: April 2011
      April 2008

    • CA-4.7.29

      Any portion of the exposure which is not collateralised shall be assigned the RW of the counterparty.

      Apr 08

    • CA-4.7.30

      As stated earlier, banks may opt for either of the two approaches listed below:

      Apr 08