Manama: Aligned with its role as advocate to the Islamic Financial Services Industry (IFSI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, announced that it has submitted the collective feedback of its members to the Islamic Financial Services Board (IFSB), Malaysian based International Standard Setter, on a new standard regulation designed to promote the sound management of liquidity risk in Institutions offering Islamic Financial Services (IIFS).
The Exposure Draft of Guidance Note 6 on Quantitative Measures for Liquidity Risk Management in Institutions offering Islamic Financial Services (ED of GN-6), which was issued by the IFSB for public consultation, aims to complement global liquidity standards issued by the Basel Committee on Banking Supervision (BCBS) and other developments on liquidity risk management for the IFSI. The standard also endeavors to support the regulatory and supervisory authorities to provide a level-playing field to the IFSI in the application of liquidity standards vis-a-vis their conventional counterparts.
“The comments submitted to the IFSB represent the views of CIBAFI Secretariat and the collective feedback received from our members. As the spokesman for the industry our perspective on the ED of GN-6 is that of practitioners who are required to implement standards and regulations while finding a balance between the requirements of regulators, the market, their shareholders, their customers, and other stakeholders,” Abdelilah Belatik, CIBAFI Secretary General, said.
The comments submitted to the IFSB by CIBAFI focused on three main areas. These included the need to clarify the regulatory treatment of various Shariah structures and the rationale for any differences, a suggestion to consider profit-sharing (such as Wakala-based) interbank flows as eligible inflows in the Liquidity Coverage Ratio (LCR) calculation, and a call to consider a review of the proposed implementation schedule of the draft in order to provide the IIFS with appropriate time to comply with the standard.
In its submission to the Islamic Financial Services Board, CIBAFI praised the IFSB for its work in promoting and enhancing the Islamic Financial Services Industry and welcomed the opportunity to actively consult with regulatory bodies such as the IFSB on issues that impact the industry.
“As the voice of the industry, CIBAFI looks forward to future ongoing dialogue with the IFSB in order to facilitate the continued growth and development of the Islamic financial services industry worldwide,” Belatik, added.
In addition to policy and regulatory advocacy, CIBAFI continues to support the Islamic Financial Services Industry through various activities. These include providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.