CA-4.8.1

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An Islamic bank licensee may provide financing and hold investments made under profit- and loss-sharing modes (Musharakah) or profit-sharing and loss-bearing modes (Mudarabah) which may be used, inter alia, to invest in the following:

(a) A commercial enterprise to undertake a business venture (with the intention of holding the investment for an indefinite period or with a view to eventual sale, such as venture capital investments or privately held equity);

(b) Diminishing Musharakah in which the share of the Islamic bank licensee can be gradually reduced during the tenure of the contact until the asset is fully sold to the partner(s);

(c) An equity investment in a company or an Islamic collective investment scheme not held for short-term resale or trading purposes³²;

(d) A specific project; or

(e) A joint ownership of real assets or movable assets (such as cars) on a Musharakah basis for onward lease or sale on an Ijara or a Mudarabah basis, respectively (i.e. Musharakah with an Ijara or Mudarabah sub-contract).

³² Banking book investments would not normally include investments in listed common shares or listed Islamic collective investment schemes, which would instead be held in the trading book.

January 2015