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  • Name-financing

    • CM-1.3.15

      Islamic bank licensees must avoid providing finance to counterparties without collateral or without adequate credit risk analysis performed on the basis of reliable audited financial statements to properly analyse the obligor’s ability to repay.

      Added: June 2022

    • CM-1.3.16

      Some licensees indulge in ‘name-financing’ which refers to the practice of financing to businesses and individuals merely on the basis of their ‘name’ or ‘reputation’ in the market. In such instances, the licensee, typically, does not receive audited financial statements and other relevant information to conduct a proper credit risk analysis, nor does it receive collateral to support the credit granting decision. The CBB prohibits licensees from engaging in such activities in order to minimise their credit risk and reputational risk.

      Added: June 2022