PD-1.3.41

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Past version: Effective from 01 Oct 2010 to 31 Mar 2011
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All banks must disclose the following regarding DCR:

a) The bank's policy on DCR, including the framework for managing the expectations of its shareholders and unrestricted IAH, the sharing of risks among the various stakeholders, and the range and measures of risk facing unrestricted IAH based on the bank's general business strategies and investment polices;

b) The historical data over the past five years for the following:

i. Total Mudarabah profits available for sharing between unrestricted IAH and shareholders as Mudarib (as a percentage of Mudarabah assets);

ii. Mudarabah profits earned for unrestricted IAH (as a percentage of assets) before any smoothing;

iii. Mudarabah profits paid out to unrestricted IAH (as a percentage of assets) after any smoothing;

iv. Balances of PER and IRR, and movement of these in determining unrestricted IAH payout excluding PD-1.3.33(p);

v. Variations in Mudarib's agreed profit-sharing ratio from the contractually agreed ratio; and

vi. Market benchmark rates selected by the bank;

c) Five year comparison of historical rate of return of unrestricted IAH in relation to the market benchmark rate selected by the bank;

d) Five year comparison between the percentage rate of returns to IAH and the percentage returns to shareholders from Mudarabah profits;

e) Amount and percentage of profits appropriated to PER and IRR;

f) Analysis of the difference between aggregate Mudarabah-earned profit and profit distributed to IAH as a function of movement in PER, IRR and the Mudarib's share; and

g) Analysis of the proportion of the RWA funded by IAH that should be considered in arriving at the total RWA together with an explanation of the underlying rationale.

Amended October 2010
April 2008