Manama, Kingdom of Bahrain | Aligned with its role as an advocate of the Islamic Financial Services Industry (IFSI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, announced that it has submitted its comments on 27th May 2018 to the Islamic Financial Services Board (IFSB) on the Exposure Draft no: 22 “Revised Standard on Disclosures to Promote Transparency and Market Discipline for Institutions Offering Islamic Financial Services [Banking Segment]”.
The Exposure Draft has been issued on 28th March 2018 and was open for public consultation until 28th May 2018.
In its comments, CIBAFI thanked the IFSB for giving the opportunity to the Islamic Financial Services Industry to comment on the Exposure Draft and provided collective feedback of its member banks from over 33 jurisdictions, comprising the following key points.
Firstly, certain disclosure templates provide a set of exposures based on different types of contracts and assets while mentioning only Ijarah, Istisna, Mudarabah, Musharakah and Murabahah. However, the ED indicates that the “IIFS may modify the breakdown and order of rows in the template if a different breakdown would be more appropriate in reflecting their activities”, thus the breakdown shall reflect all types of contracts that might be used in securitisation. The ED should also provide for the treatment of hybrid securitisation which may depend on more than one contract.
Seconldy, the ED states that Islamic financial institutions (IFIs) shall disclose whether they comply in full with the IFSB’s Corporate Governance Standard, and if it not, an explanation of any non-compliance should be disclosed. IFIs in many countries follow the national code or guidelines of corporate governance which are observed first and foremost, thus they are not required to follow the IFSB’s corporate governance standards.
Thirdly, The Basel Committee on Banking Supervision (BCBS) has issued a Consultative Document “Pillar 3 disclosure requirements - updated framework” in February 2018. The BCBS’s new updated framework on Pillar 3 disclosure requirements should be reflected in IFSB’s new standard. For instance, the BCBS’s CD provided new disclosure requirements on asset encumbrance and Capital Distribution Constraints (CDC) which should also be reflected in IFSB standards.
Full comments submitted to the IFSB are available on CIBAFI’s website: http://www.cibafi.org.
In addition to policy and regulatory advocacy, CIBAFI continues to support the Islamic Financial Services Industry through various activities and initiatives. These include providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.
About the General Council for Islamic Banks and Financial Institutions (CIBAFI)
CIBAFI is an international organization established in 2001 and Headquartered in the Kingdom of Bahrain. CIBAFI is affiliated with the Organization of Islamic Cooperation (OIC). CIBAFI represents the Islamic financial services industry globally, defending and promoting its role, consolidating co-operation among its members, and with other institutions with similar interests and objectives. With over 125 members from 33 jurisdictions, representing market players, international intergovernmental organizations and professional firms, and industry associations.
For more information about CIBAFI, please visit www.CIBAFI.org
Tel: +973 17357300 Email: media@cibafi.org
© Press Release 2018
