IFSB Issues Consultation on Financial Inclusion and Islamic Finance
IFSB issued an Exposure Draft of Technical Note-3 on Financial Inclusion and Islamic Finance (ED TN-3). The comment period on the consultation ends on December 28, 2018. IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics, and other interested parties.
The aim of ED TN-3 is to provide guidance on good practices in regulating the financial sector to enhance financial inclusion through Islamic finance, while considering proportionality in balancing the benefits of regulation and supervision against the risks and costs. The ED TN-3 underscores the importance of financial inclusion, due to its intricate connection with economic growth, shared prosperity, and poverty reduction, while furthering an understanding of how financial inclusion policies and regulatory initiatives can support Islamic microfinance/savings/investment activities.
The ED TN-3 also covers recent developments in enhancing financial inclusion through digital finance and financial technology (fintech) platforms while further identifying the key challenges and emerging issues, as experienced by the market players and regulators, in microfinance and financial inclusion related to Islamic financial services. Finally, the ED TN-3 explores practical modalities for the integration of social finance modes in Islamic finance (for example, zakāh, sadaqah, waqf) with the commercial Islamic financial services industry (IFSI) to promote financial inclusion. The objectives of ED TN-3 include the following:
- Provide international benchmark guidelines on regulatory and supervisory policies to support financial inclusion initiatives in the IFSI
- Provide guidance to RSAs on the application of the proportionality principle so that the benefits of regulation and supervision can be balanced against the risks and costs
- Factor in recent developments in enhancing financial inclusion through Shari’ah-compliant mechanisms by digital finance and fintech platforms
- Consider a modality for the integration of modes of Islamic social finance (for example, zakāh, sadaqah, waqf) with the commercial IFSI
- Highlight challenges in, and propose solutions to, emerging regulatory issues in microfinance and financial inclusion activities in the IFSI
The scope of this ED TN-3 includes the banking sector as well as the non-bank financial institutions and the Islamic capital market in promoting financial inclusion, where needed. The ED TN-3, however, excludes takāful sector from its scope, as a recent joint IFSB–IAIS working paper has already covered aspects of regulation and supervision of microtakāful activities.
Related Links
Comment Due Date: December 28, 2018
Keywords: International, Banking, Securities, Islamic Finance, Financial Inclusion, Fintech, ED TN-3, IFSB
Previous Article
EC Approves Prolongation of Italian Guarantee Scheme for NPLsRelated Articles
EBA Proposes Guidelines for Establishing Intermediate Parent Entities
EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
