Versions

 

LR-1.2.12

The purpose of Rule LR-1.2.11 is to ensure that the core Islamic banking activities of accepting Shari'a money placements/deposits, and managing Shari'a profit-sharing investment accounts, form part of the definition of Islamic wholesale banks. However, unlike Islamic retail banks, there is no requirement that the activity of providing Shari'a financing contracts must be a significant part of the bank's business, relative to other activities. This is to allow Islamic wholesale banks greater flexibility as to the nature of their activities; it also recognises that, because of the wholesale nature of their client base, there is less need to limit the scale of non-credit related risks to which their depositors and profit-sharing investors may be exposed. Rule LR-1.2.11 does not in any way prevent Islamic wholesale banks from providing Shari'a-compliant finance as a major activity, should they wish to.

October 2007