PD-1.3.32
Past version: Effective from 01 Apr 2008 to 30 Sep 2010
To view other versions open the versions tab on the right
The following qualitative disclosures should be made when the concerned Islamic bank has unrestricted investment accounts:
a) Written procedures and policies applicable to the investment
accounts, including a synopsis of the following:
• General applicable investment objectives;
• Range of investment products available;
• Characteristics of investors for whom various
investment accounts may be appropriate;
• Purchase, redemption and distribution procedures,
including IAH's rights to withdraw funds during the
term of the Mudarabah contract, and any penalties,
such as forfeited shares of profits, that will be incurred
by doing so;
• Experience of portfolio managers, investment advisors
and trustees;
• Governance arrangements for the IAH funds; and
• Strategy for trading and organization of assets.
b) Disclosure that IAH funds are invested and managed in
accordance with Shari'a requirements.
c) Product information and the manner in which the products
are made available to investors.
d) Basis and method of allocation of assets, expenses and profit
in relation to IAH funds, including, with particular reference
to unrestricted IAH, the co-mingling of their funds with
other funds managed by the bank, the balance between
shareholders' and IAH's interests in terms of allocating
investment funds and the risk-return characteristics of
investments.
e) Disclosures on the policies governing the management of
IAH funds, which covers the approaches to the management
of investment portfolio, establishment of prudential reserves,
and the calculation, allocation and distribution of profits,
including the extent of management's right to appropriate
IAH's share of investment profit in order to build up PER
and or IRR, to use these reserves to smooth profit payouts to
IAH, the rules governing the transfer of funds to or from
PER and IRR, including contractual or regulatory limits on
management's discretion in the matter and the disposition
of unused balances on these accounts at the end of the
relevant Mudarabah contract.
f) The availability of "personal banking" and investment
advisory and financial planning services for the benefit of
IAH, and the degree of independence of such advisors in
recommending products offered by other banks.
g) Complaints procedures available to dissatisfied IAH.
h) The extent of any sharing of profits from the bank's
provision of fee-based banking.
i) The extent to which the bank is committed to paying a
competitive rate of return by accepting DCR.
j) The major changes in the investment strategies that affect
the investment accounts (including commingling of funds).
k) Bases applied for charging expenses to unrestricted IAH.
l) Description of total administrative expenses charged to
unrestricted IAH.
April 2008