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IFR 5.4.1 Guidance

Past version: effective from 01/03/2010 - 08/12/2012
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1. An Authorised Firm undertaking Islamic Financial Business is required to maintain initial and ongoing Capital Requirements in accordance with Rules PIB 2.2.1 and PIB 2.3.1. These requirements are summarised in Table 1.
2. In accordance with PIB Rule 2.6.1, an Authorised Firm undertaking Islamic Financial Business is required to ensure that only the components of capital which are set out in the table in PIB Rule 2.6.2 are included in the calculation of capital.
3. In accordance with PIB Rule 2.9.1, an Authorised Firm undertaking Islamic Financial Business is required to exclude from Tier Two capital any amount by which the total of the Profit Equalisation Reserve and the Investment Risk Reserve exceeds the Displaced Commercial Risk Capital Requirement.
4. For the purpose of calculating Capital Requirements, an Authorised Firm undertaking Islamic Financial Business or otherwise investing in or holding Islamic Contracts should give due importance to the economic substance of the transaction, in addition to the legal form of the Islamic Contracts.

Table 1

Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]