CA-4.7.14
The types of collateral are eligible for relief in respect of the CRM techniques outlined in Paragraphs CA-4.7.7 to CA-4.7.13 include:
(a) Cash on deposit29 with the Islamic bank licensee which is incurring the exposure;
(b) Sukuk rated by an external rating agency which is issued by:
(i) Sovereigns and PSEs (treated as sovereigns) with a minimum rating of BB-; or
(ii) Issuers other than the above and other than the concerned Islamic bank licensee , with a minimum rating of BBB- or A-3/ P-3;
(c) Unrated Sukuk but which fulfil each of the following criteria:
(i) Issued by a bank other than the concerned Islamic bank licensee or a sovereign;
(ii) Listed on a recognised exchange;
(iii) All other rated issues by the issuing Islamic bank or conventional bank must be rated at least BBB — or A-3/P-3 by a recognised ECAI, as determined by the CBB;
(iv) The Islamic bank which incurs the exposure or is holding the collateral has no information to suggest that the issue would justify a rating below BBB- or A-3/P-3; and
(v) The Islamic bank licensee must show that these Sukuk are liquid in a two-way market;
(d) Shari'a compliant equities and units in Islamic collective investment undertakings that are listed in a main index excluding those issued by the concerned bank (which are subject to the treatments for holdings of own instruments outlined in Paragraph CA-2.4.12);
(e) Shari'a compliant guarantees issued by third parties that fall within the following categories:
(i) Sovereigns and central banks;
(ii) PSEs;
(iii) MDBs;
(iv) International organisations/official entities with 0% RW
(v) Islamic banks or conventional banks; and
(vi) Corporate entities (including Takaful and Shari'a compliant securities firms) either by the parent, subsidiary and/or affiliate s, of a minimum rating of A-; and
(f) Certain physical assets fulfilling the function of collateral, as stated in Paragraph CA-4.7.10 (See also section CA-3.5).
29 Must be supported by an agreement or documentation that gives the bank the right of set-off against the amount of receivables due. The treatment of netting of such deposits are outlined in Paragraph CA-4.2.30.
January 2015