Risk Management in
Islamic Financial Instruments
58
banks under same regulatory authority; securities firms under separate authority ♦Private banks
♦Dual banking system ♦Islamic windows allowed in conventional banks ♦Consolidated supervision
♦Basel capital requirements and core principles adopted ♦International Accounting Standards
adopted ♦CAMELS rating system adopted ♦Onsite and offsite supervision well defined with clear
objectives ♦Separate Sharī‘ah boards at institutional level in the BNM and Securities Exchange
Commission ♦Islamic money market and liquidity arrangement exists ♦Ministry of Finance closely
associated with the supervision of Islamic banks
Pakistan Regulated by the Central Bank of Pakistan (State Bank of Pakistan-SBP) ♦ Securities firms, and
Insurance Companies are regulated by separate regulatory bodies ♦Major banks in the Public Sector;
bank regulation and supervision effected by government policies ♦Islamic banking law does not exist
♦Mudārabah Companies Law exists ♦Sharī‘ah board concept does not exist ♦ Islamic banks are not
identified distinctly ♦ Basel capital requirements and supervisory standards adopted ♦Bank merger is
on cards to strengthen capital ♦ Concept of onsite and offsite supervision exists ♦Major financial
transformation is called for by the Supreme Court of Pakistan to introduce Islamic banking and
financial system; a Financial Services Transformation Committee has been established by the SBP.
Qatar Regulated by the Central Bank of Qatar (CBQ) ♦Dual banking and separate regulatory system ♦ No
separate Islamic banking law exists ♦Islamic banks supervised by special directives of CBQ ♦ Separate
Sharī’ah boards for banks required ♦Standardized transparency requirements for Islamic banks exist
Sudan Regulated by the Central Bank of Sudan (CBS) ♦Single (Islamic) system ♦Islamic banking law in place
♦Separate Sharī’ah boards for banks required, also the Central Bank has a Sharī‘ah Supervisory Board
♦Substantial public sector control; supervision and regulation is effected by other government policies
♦Evolution of financial instruments underway ♦Compliance with the capital adequacy and supervisory
oversight standards of the Basel Committee not clear ♦Major bank merger is planned to strengthen
bank capital
Turkey Regulated by the Banking Regulation and Supervision Agency (Bankacılık Düzenleme ve Denetleme
Kurumu – BDDK ♦Banks and securities firms regulated by separate bodies ♦Law about Special Finance
Houses covers Islamic banks ♦Dual system; no Islamic windows allowed ♦Basel Committee capital
adequacy requirements and supervisory standards recently introduced ♦Major financial
transformation underway ♦Onsite and offsite supervision concepts and methods exist
UAE Regulated by the Central Bank of UAE ♦Islamic banking law exists ♦Dual system ♦Islamic banking
windows allowed ♦Separate Sharī‘ah boards required ♦Basel Committee capital adequacy
requirements and supervisory standards in place ♦International Accounting Standards in place
Yemen Regulated by the Central Bank of Yemen (CBY) ♦Islamic banking law exists ♦ Dual system ♦Islamic
banking windows allowed ♦Separate Sharī‘ah board required ♦Major policies and standards set by the
CBY are equally applicable to all banks ♦Separate supervisory office for Islamic banks inside the CBY
under active consideration ♦Compliance with the Basel standards not clear
Bangladesh Regulated by Bangladesh Bank, the central bank of the country ♦Dual banking system ♦Window
banking has recently criticized but still available ♦ moving towards Basel II full implementation, and
running Basel III quantitative impact studies ♦separate divisions in central bank to monitor Islamic
banking activities, but now separate law for Islamic banking.
Brunei-
Darussalam
Authority Monetary Brunei Darussalam monitors the monetary issues in Brunei ♦currency is pegged
to Singaporean Dollar ♦separate control authority under AMBD for insurance capital market and
banks ♦both on-site and off-site supervision available using risk-based approach ♦will be
implementing Basel II fully shortly ♦IOSCO standards were also followed ♦dual banking system is
currently at operation.
Comoros Central Bank of Comoros monitors the regulatory issues ♦follows Basel banking supervision standards