CM-1.7 CM-1.7 Credit Risk Reporting
CM-1.7.1
Islamic bank licensees must have an effective MIS that captures all on and off-balance sheet credit exposures.Added: June 2022CM-1.7.2
The MIS must enable the
senior management to identify any concentrations of risk within the credit portfolio.Added: June 2022CM-1.7.3
The MIS must comprehensively cover reporting of NPEs, including but not limited to the following:
(a) NPE related KPIs and performance against the KPIs;(b) Forbearance activity levels;(c) Early warning indicators;(d) Liquidation, foreclosure, provisions for impairment and write offs; and(e) Risk adjusted returns and capital implications.Added: June 2022CM-1.7.4
The MIS must be able to aggregate all such credit exposures to a single obligor and also aggregate exposures to groups of accounts under common ownership or control. This data must be aggregated in an accurate and timely manner and monitored as part of the
licensee’s credit risk management process.Added: June 2022CM-1.7.5
The MIS must provide the Board and
senior management with timely and forward-looking information oncredit risk management to support them in identifying emerging concerns oncredit risk as well as in managing credit stress events. The MIS must be fit for the purpose of supporting thelicensee’s day-to-day monitoring of compliance with established policies, procedures and limits.Added: June 2022CM-1.7.6
Risk management reports must be accurate and precise to ensure that
Islamic bank licensees' Board andsenior management can rely, with confidence, on the aggregated information to make critical decisions about risk.Added: June 2022CM-1.7.7
To ensure the accuracy of the reports,
Islamic bank licensees must maintain, at a minimum, the following:(a) Defined requirements and processes to reconcile reports to risk data;(b) Automated and manual edit and reasonableness checks, including an inventory of the validation rules that are applied to quantitative information. The inventory must include explanations of the conventions used to describe any mathematical or logical relationships that must be verified through these validations or checks; and(c) Integrated procedures for identifying, reporting and explaining data errors or weaknesses in data integrity via exception reports.Added: June 2022CM-1.7.8
Risk management reports to the Board and
senior management must provide a forward-looking assessment of risk and must not just rely on current and past data. The reports must contain forecasts or scenarios for key market variables and the effects on thelicensee , so as to inform the Board and senior management of the likely trajectory of thelicensee’s capital and risk profile in the future.Added: June 2022CM-1.7.9
Islamic bank licensees must develop an inventory and classification of risk data items which includes a reference to the concepts used to elaborate the reports.Added: June 2022CM-1.7.10
The
credit risk reports must be clear and useful. Reports must reflect an appropriate balance between detailed data, qualitative discussion, explanation and recommended conclusions. Interpretation and explanations of the data, including observed trends, must be clear.Added: June 2022CM-1.7.11
Islamic bank licensees must confirm periodically with the recipients that the information aggregated and reported is relevant and appropriate, in terms of both quantity and quality, to the governance and decision-making process.Added: June 2022CM-1.7.12
Islamic bank licensees must assess, periodically, the purpose of each report, adequacy of the scope of the information in the reporting and MIS and set requirements for how quickly the reports need to be produced in both normal and stress/crisis situations. Thelicensee must routinely test its ability to produce accurate reports within established timeframes, particularly in stress/crisis situations.Added: June 2022
