Islamic bank licensees must have policies to define adequately the action to be taken by the Islamic bank licensee when a customer cancels a non-binding purchase order. The policies must describe how the Islamic bank licensee:
(a) Will monitor and control its exposures to suppliers, and especially during delivery between suppliers to the Islamic bank licensee where a customer is acting as an agent; and
(b) Identify whether the risks associated with the assets will be borne by the supplier or the customer (which acts as agent and accepts the assets from the supplier)6.
6Islamic bank licensees shall be mindful that the counterparty risk will not commence prior to execution of other contracts or before certain events take place. In the case of certain Murabahah transactions, the long period preceding the delivery of imported goods from abroad gives rise to other risks which may not all be covered by takaful or insurance.
January 2013
