RM-5.2.2

There are two major types of fund providers:

These account holders require a degree of liquidity to be maintained by the Islamic bank licensees to meet their requirements for withdrawals. Subject to contractual conditions, investors in CIUs (while not on-balance sheet fund providers) may also give rise to liquidity management considerations, in so far as Islamic bank licensees may need to replace funds withdrawn by an investor pending realisation of the related assets.

RM-5.2.3

As current account holders do not participate in the profits of the Islamic bank licensees' business activities, a sound repayment capacity is required to meet fully cash withdrawal requests as and when they arise.

RM-5.2.4

Some Islamic bank licensees may rely heavily on funds provided by current account holders. Repayment by the Islamic bank licensees of the principal amounts deposited by current account holders is guaranteed without any rights to share in profits, as the current account holders do not share in the risks of the Islamic bank licensees.

RM-5.2.5

Unrestricted IAH are investors who participate in the uncertainties of an Islamic bank licensee's business; therefore, they share in profits and bear losses arising from investments made on their behalf, to the extent of their share. Apart from general withdrawal needs, the withdrawals made by IAH may be the result of:

RM-5.2.6

Where the principle of Mudarabah is employed to source the funds, from an asset-liability management perspective, Islamic bank licensees may be viewed as being hedged to the extent that the IAH bears the risks of the assets in which its funds are invested. This statement is true only if the Mudarib has acted in accordance with its fiduciary duties under the Mudarabah contracts and without misconduct or negligence.

RM-5.2.7

IAH do not share in the risks on assets financed by current accounts, which are borne by shareholders alone.

RM-5.2.8

As fiduciary agents, Islamic bank licensees are concerned with matching their investment policies with IAH and shareholders' risk appetites. If these investment policies are not consistent with the expectations and risk appetites of IAH, the latter may withdraw their funds leading to a liquidity crisis for the Islamic bank licensees.