null The IFSB Council Adopts a New Technical Note on Recovery and Resolution for Institutions Offering Islamic Financial Services
The IFSB Council Adopts a New Technical Note on Recovery and Resolution for Institutions Offering Islamic Financial Services
10 Jun 2022 | Friday Source: IFSB
The Council of the Islamic Financial Services Board (IFSB) has resolved to approve the adoption of a new Technical Note, “TN-4: Technical Note on Recovery and Resolution (TNRR) for Institutions Offering Islamic Financial Services (IIFS)” at its 40th Meeting held virtually on 9 June 2022.
The aim of TN-4 is to complement the existing Financial Stability Board’s (FSB) Key Attributes (KAs) by providing complementary guidance and information addressing the idiosyncrasies of Islamic finance and Sharī‘ah compliance requirements applicable to each KA. In addition, the TNRR intends to provide guidance that addresses Sharī‘ah specificities in relation to the high-level recovery and resolution (RR) framework and the recovery planning process for IIFS, which are not covered in the FSB’s KAs.
The primary objective of TN-4 is to facilitate the relevant regulatory and supervisory authorities (RSAs) and other related authorities to establish an effective RR framework and appropriate tools for its effective implementation for IIFS, in a manner that is fully compliant with Sharī‘ah principles. The foregoing primary objective of TN-4 subsumes the following constituent objectives:
- to set out the essential measures to carry out effective recovery and resolution planning for all IIFS;
- to support and enable effective resolvability assessments critical for the IIFS; and
- to ensure Sharī‘ah governance in relation to the RR framework for IIFS.
TN-4 is primarily intended to facilitate the establishment of effective RR frameworks for IIFS as part of the firm-level regulation of full-fledged (i.e. separately incorporated) banks, including both domestic systemically important banks (D-SIBs) and non-DSIBs. These IIFS include but are not limited to, commercial banks, investment banks and other fund-mobilising institutions, as determined by the respective supervisory and related authorities, that offer services in accordance with Sharī`ah rules and principles. The scope of TN-4 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.
The softcopies of TN-4 will be available on the IFSB website, www.ifsb.org in both English and Arabic languages.
The 40th Council Meeting was chaired by the State Bank of Pakistan and attended by central bank governors and deputy governors, Executive Presidents, Managing Directors, Chairmen, top senior officials and heads of regulatory and supervisory authorities as well as senior representatives from among the Council and Full members of the IFSB, representing 20 countries and the Islamic Development Bank.
Date posted: 9 June 2022