Muscat: The General Council for Islamic Banks and Financial Institutions (CIBAFI) announced that it has submitted its comments on May 27, 2018, to the Islamic Financial Services Board (IFSB).
It has submitted its comments on the Exposure Draft (ED) no: 22 “Revised Standard on Disclosures to Promote Transparency and Market Discipline for Institutions Offering Islamic Financial Services [Banking Segment].”
The ED was issued on March 28, 2018, and was open for public consultation until May 28, 2018. In its comments, CIBAFI thanked the IFSB for giving an opportunity to the Islamic Financial Services Industry to comment on the ED and provided collective feedback of its member banks from over 33 jurisdictions, comprising the following key points.
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.
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.
The Basel Committee on Banking Supervision (BCBS) 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.
CIBAFI is the global umbrella of ISI.