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  • BC-B.2 BC-B.2 Principle 2: Due Care and Diligence

    • BC-B.2.1

      An Islamic bank licensee must exercise due care and diligence and in the best interests of their stakeholders in all its operations, including the way it structures and offers its products and provides financing, with particular regard to Shari a compliance, and to the thoroughness of research and risk management. See Paragraphs BC-9.12.8 to BC-9.12.13.

      Amended: October 2015
      Added: July 2015

    • BC-B.2.2

      Paragraph BC-B.2.1 includes any duty of best execution. In Islamic finance, there are typically two major categories of investors—that is, the shareholders and the investment account holders (IAH). Islamic bank licensees are required to exercise due care and diligence in safeguarding the interests of such investors. Refer to Principle 6 (BC-B.6).

      Added: July 2015

    • BC-B.2.3

      An Islamic bank licensee must have in place appropriate safeguards against occurrences of behaviour that constitutes a lack of due care and diligence amounting to culpable negligence. These safeguards include appropriate staff training. Refer to Principle 3 (BC-B.3).

      Added: July 2015

    • BC-B.2.4

      An Islamic bank licensee offering Shari'a-compliant financing must exercise due diligence in making such financing available to customers, in the interests of both its fund providers and its customers. It is not acceptable business conduct for an Islamic bank licensee to be lax in applying criteria of creditworthiness, or relying only on collateral to mitigate credit losses, especially in cases where the Islamic bank licensee exercising its rights over the collateral would inflict hardship on the debtor.

      Added: July 2015

    • BC-B.2.5

      An Islamic bank licensee should endeavour to take all reasonable steps to assist the debtor.

      Added: July 2015

    • BC-B.2.5.A

      An example of assisting debtors is by restructuring the financing, prior to exercising the Islamic bank licensee's rights over the collateral.

      Added: July 2015

    • BC-B.2.6

      An Islamic bank licensee must balance the interests of its various stakeholders, which may include IAH as well as debtors.

      Added: July 2015

    • BC-B.2.7

      An Islamic bank licensee must exercise due diligence in the placement of IAH s money to fund financing facilities or investments, and in any other activities where a proper evaluation of risks, with the collection and analysis of the information necessary for this purpose, is called for.

      Added: July 2015