CA-A.3.2
CAR will be calculated by applying the regulatory capital to the numerator and risk-weighted assets (RWAs) to the denominator.
Eligible Capital
{ Total Risk-weighted Assets (Creditb + Marketb Risks) Plus Operational Risks
Less
Risk-weighted Assets funded by Restricted PSIAc (Creditb + Marketb Risks)
Less
(1 - α) [Risk-weighted Assets funded by Unrestricted PSIAc (Creditb + Marketb Risks)]
Less
α [Risk-weighted Assets funded by PER and IRR of Unrestricted PSIAe (Creditb +
Marketb Risks)]}
(a) Total RWA include those financed by both restricted and unrestricted Profit Sharing Investment Accounts (PSIA);
(b) Credit and market risks for on- and off-balance sheet exposures;
(c) Where the funds are commingled, the RWA funded by PSIA are calculated based on their pro-rata share of the relevant assets. PSIA balances include PER and Investment risk reserve (IRR) or equivalent reserves;
(d) — α refers to the proportion assets funded by unrestricted PSIA which, as determined by the CBB, is 30%; and
(e) The relevant proportion of risk-weighted assets funded by the PSIA's share of PER and by IRR is deducted from the denominator. The PER has the effect of reducing the displaced commercial risk and the IRR has the effect of reducing any future losses on the investment financed by the PSIA.
The above formula is applicable as the Islamic banks may smooth income to the Investment Account Holders (IAHs) as part of a mechanism to minimise withdrawal risk and is concerned with systemic risk.
The above formula is applicable as the Islamic banks may smooth income to the Investment Account Holders (IAHs) as part of a mechanism to minimise withdrawal risk and is concerned with systemic risk.
Amended: April 2011
April 2008
April 2008