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RM-7.2.6

Fiduciary risk is the risk that arises from Islamic bank licensees' failure to perform in accordance with explicit and implicit standards applicable to their fiduciary responsibilities. As a result of losses in investments, Islamic bank licensees may become insolvent and therefore unable to:

(a) Meet the demands of current account holders for repayment of their funds; and
(b) Safeguard the interests of their IAHs. Islamic bank licensees may fail to act with due care when managing investments resulting in the risk of possible forgone profits to IAH.
January 2013