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  • Summary of Capital Requirement at Various Stages of the Contract

    • CA-3.6.15

      The following table sets out the Musharakah categories that attract capital charges:

      Musharakah Category Credit RW Market Risk Capital Charge
      Private commercial enterprise to undertake trading activities in the foreign exchange, share and/or commodity Not applicable. Depends on the underlying asset as set out in the applicable market risk section
      Private commercial enterprise to undertake business venture other than trading activities in the foreign exchange, share and/ or commodity
      (a) Simple RW method 400% RW of the contributed amount* to the business venture less any specific provisions. (If there is a third-party guarantee, the RW of the guarantor is substituted for that of the assets for the amount of any such guarantee)

      Or
      (b) Slotting method Between 90–270% RW of the contributed amount* to the business venture based on the four categories
      		Not applicable
      Joint ownership of real estate and movable assets (Musharakah with Ijara subcontract,

      Musharakah with Murabahah subcontract)             		Based on lessee's (for Ijara sub-contract) or customer's (for Murabahah subcontract) rating or 100% RW for unrated lessee or customer Please refer to the market risk capital charge requirements as set out under the sub-contracts

      * In the case of Diminishing Musharakah, the contributed amount is based on the remaining balance of the invested amount.

      January 2015