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RM-5.3.5

Islamic bank licensees must identify any future shortfalls in liquidity by constructing maturity ladders based on appropriate time bands, including those specified by the CBB in Module LM. The Islamic bank licensees may have their own criteria for classifying cash flows, including behavioral methods, and may consider differentiating the types of cash flows as indicated below:

(a) Known cash flows — the maturities and the amounts are known in advance. This category includes contractual receivables from Murabaha, Ijara, IMB receivables and Diminishing Musharakah;
(b) Conditional but predictable cash flows (Salam and Istisna') — conditionality is defined in terms of the type of contract or performance of work based on the agreed terms and conditions over an agreed period; or
(c) Conditional and unpredictable cash flows — in some cases, an investment in a Musharakah is for an open-ended period and an exit strategy may be assessed periodically. The redemption of invested capital and possible levels of return on investment is conditional upon the performance of the activities.
January 2013