The Council of the Islamic Financial Services Board (IFSB) approved the adoption of a new Technical Note (TN-4) on Recovery and Resolution for institutions offering Islamic financial services.
The technical note is intended to facilitate the relevant regulatory and supervisory authorities and other related authorities to establish an effective recovery and resolution framework; it is also intended to help establish appropriate tools for the effective implementation of this framework for institutions offering Islamic financial services, in a manner that is fully compliant with Sharī‘ah principles. The technical note complements the existing Financial Stability Board (FSB) Key Attributes of Effective Resolution Regimes by providing complementary guidance and information addressing the idiosyncrasies of Islamic finance and Sharī‘ah compliance requirements. The objectives of the technical note include:
- setting out the essential measures to carry out effective recovery and resolution planning for all institutions offering Islamic financial services.
- supporting and enabling effective resolvability assessments critical for the institutions offering Islamic financial services.
- ensuring Sharī‘ah governance in relation to the recovery and resolution framework for institutions offering Islamic financial services.
The technical note intends to facilitate the establishment of effective recovery and resolution frameworks for institutions offering Islamic financial services as part of the firm-level regulation of full-fledged (that is, separately incorporated) banks, including both domestic systemically important banks (D-SIBs) and non-DSIBs. The technical note is applicable to all institutions offering Islamic financial services, including commercial banks, investment banks, and other fund-mobilizing institutions, as determined by the respective supervisory and related authorities, that offer services in accordance with the Sharī`ah rules and principles. The scope also includes Islamic banking “windows” (either a branch or a dedicated unit), which are part of a conventional financial institution while providing financial services in a fully Sharī‘ah-compliant manner.
Related Link: Press Release
Keywords: International, Banking, Insurance, Securities, Basel, Islamic Finance, Islamic Banking, Resolution Framework, Recovery Planning, Key Attributes, FSB, Technical Note, D-SIBs, IFSB
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