The IFSB issues Exposure Draft on Revised Capital Adequacy Standard for institution offering Islamic banking services (ED-RCAS) for public consultation

4 November 2019, Kuala Lumpur - The Islamic Financial Services Board (IFSB) has today issued the Exposure Draft on Revised Capital Adequacy Standard for Institutions Offering Islamic Banking Services (ED-RCAS) for Public Consultation for a period of sixty days, starting from 4 November 2019 until 02 January 2020. In view of this, IFSB invites comments from central banks, regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics and other interested parties.

The aim of ED-RCAS is to align the IFSB capital adequacy standard (IFSB-15) with global capital standards, particularly the Basel III final reforms. The ED-RCAS made several enhancements to the IFSB-15 with the aim of making it more comprehensive and robust and in tune with global best practice in terms of regulatory capital adequacy framework for institutions offering Islamic banking services. The incorporation of the global best practices in the Standard will ensure the provision of a level playing field to IIFS vis-à-vis the conventional financial institutions subjected to capital regulatory framework. The ED-RCAS provides enhanced guidance to the RSAs and with the necessary flexibility for its application across regions and on small to fairly large and sophisticated IIFS. The main objectives of this Standard is to:

(a)        Assist the IIFS and their supervisory authorities in the implementation of a capital adequacy framework that will ensure effective coverage of risk exposures of the IIFS and allocation of appropriate capital to cover these risks, thus enhancing the resilience of the IFSI;