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    BNM Policy Document on Trade Credit Insurance and Trade Credit Takaful

    May 03, 2019

    BNM published a policy document sets out requirements on the offering of trade credit insurance and trade credit takaful by licensed insurers and takaful operators. The policy document comes into effect on May 03, 2019. The requirements for the recognition of trade credit insurance and trade credit takaful as credit risk mitigation are also outlined under the capital adequacy frameworks for Basel II (risk-weighted assets or RWAs) and Islamic banks (RWAs), respectively. Therefore, BNM also published updated documents on Capital Adequacy Framework (Basel II – risk-weighted assets) and Capital Adequacy Framework for Islamic banks (risk-weighted assets).

    The policy document on trade credit insurance and trade credit takaful sets out the approval process and requirements on the offering of trade credit insurance by a licensed insurer and trade credit takaful by a licensed takaful operator. The document also sets out the treatment of trade credit insurance or trade credit takaful as credit risk mitigation (CRM) by a banking institution under the Capital Adequacy Framework applicable to it. These policy requirements seek to position insurance and takaful products to better meet the protection needs of businesses.


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    Effective Date: May 03, 2019

    Keywords: Asia Pacific, Malaysia, Banking, Insurance, Basel II, Capital Adequacy Framework, Risk-Weighted Assets, Trade Credit Insurance, Trade Credit Takaful, BNM

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