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PRU 2.2.1 Guidance for form PIB1 — Balance Sheet (Conventional Authorised Firms)

Instructional Guidelines

Item No. Item Guidance
1.1.1 Cash and Balances with Central Banks Include, for example, the following amounts:
•   Notes and coins;
•   Long positions in Gold bullion (including Tola Bars);
•   Amounts placed with central banks including funds required to be placed on deposit with central banks and monetary authorities.
1.1.2 Treasury bills and other eligible bills Treasury bills issued by the national governments or by the Central banks on behalf of the governments. Also include bills issued by other entities, which are eligible for rediscounting with the central bank.
1.1.3 Money market placements Include deposits at call and other money market placements with banks or other money market participants
1.2.1 Trading securities Include investments acquired principally for the purpose of selling or repurchasing them in the near term for short-term-profit-taking. This would include but not limited to, debt, equity and hybrid instruments
1.2.2 Derivative financial instruments Include, but are not limited to, positions representing the following instruments, recorded at fair value:

Forward and Futures contracts in Currencies, Interest rates and other financial assets
Forward rate agreements
Currency and interest rate swaps
Credit derivatives
Option contracts on currency, interest rate and other financial assets.

These derivatives include both the exchange-traded and over-the-counter versions.
1.2.3 Other financial instruments at fair value through profit and loss Include all financial instruments which are, upon initial recognition, designated by the entity as financial assets to be measured at fair value through profit or loss other than the trading securities included in 1.2.1.
1.2.4 Investment securities — available for sale Include non-derivative financial assets that are designated as available for sale by the firm or that have not been classified under any of the other categories of investment in section 1.2.
1.2.5 Investment securities - held to maturity Include non-derivative financial assets with fixed or determinable payments and fixed maturity that the firm has positive intention and ability to hold to maturity.
1.2.6 Investments in associated undertakings Include investments in entities, including unincorporated entities such as partnerships, over which the firm has significant influence and where the entity in question is neither a subsidiary nor a joint venture operation
1.3 Loans and advances Amounts arising from, for example:
•   Revolving credit facilities;
•   Credit cards outstanding balances;
•   Housing loans (both variable and fixed rates);
•   Term loans (both variable and fixed rates);
•   The book value of assets leased out under finance lease agreements;
•   Loans made under conditional hire purchase contracts;
•   Advances purchased by or assigned to the reporting institutions, factoring or similar arrangements
•   Other loans and advances.

The amounts reported should be gross of provisions (as specific and general provisions should be reported in the Liabilities section of the balance sheet) and net of interest receivable.
1.4.1 Murabaha and Istina'a receivables Report here all receivables relating to Murabaha and Istisna'a contracts. Refer to FAS 2 and FAS 10 of AAOIFI respectively.
1.4.2 Ijarah assets and receivables Include Ijarah assets net of depreciation/ amortisation and Ijarah receivables. Refer to FAS 8 of AAOIFI.
1.4.3 Mudaraba Financing Capital provided on a Mudaraba basis should be reported here. Refer to FAS 3 of AAOIFI.
1.4.4 Musharaka Financing Report capital provided on a Musharaka basis. Refer to FAS 4 of AAOIFI. Investment in the share capital of another company should be reported under "Other", Form PIB 1, Item No. 1.4.5.
1.4.5 Other investments Include any other investments undertaken through Islamic contracts, including Parallel Istisna'a assets (refer FAS 10 of AAOIFI) and capital provided on Salam contracts (refer FAS 7 AAOIFI).
1.5 Fixed assets Include, for example, the value of the following:
•   Plant and equipment, the residual value of items leased out under an operating lease (excluding balances relating to named Ijarah assets which should be included separately in Form PIB 1, Item No. 1.4.2);
•   Own premises being occupied or developed for occupation by the Authorised Firm, property (excluding property acquired / held available for sale which should be included in "Other Assets", Form PIB 1, Item No. 1.7).

The amounts reported here should be net of accumulated depreciation and amortisation.
1.6.1 Goodwill Include amounts relating to any purchased goodwill.
1.6.2 Other intangible assets Items to be included:
•   Capitalised development costs
•   Brand names, trademarks and similar rights
•   Licences and exchange seats which may be held as part of the Authorised Firm's trading requirement.
1.7 Other assets Assets that have not been included in any of the items above. In particular, positions in short term securities held with the intention of resale, sundry debtors, prepayments and accrued income not identified elsewhere.
1.9.1 Direct credit substitutes These relate to the financial requirements of counterparty where the risk of loss to the Authorised Firm on the transaction is equivalent to a direct claim on the counterparty. Include here
•   Guarantees of a financial nature to stand behind the current obligations of customers (e.g. loan guarantees);
•   Guarantees of leasing operations;
•   Letters of Credit and Stand-by Letters of Credit to the extent that they do not qualify for inclusion in Item No. 1.9.3 "Trade related contingents" below;
•   Guarantees of a capital nature such as undertakings given to a non bank financial company which are considered as capital by the appropriate regulatory body. Guarantees given to a company not connected to the reporting institution should be risk weighted at 100% and those for connected companies should be deducted from the reporting institution's capital base.
•   Acceptances granted and risk participation in bankers' acceptances. Where the reporting institution's own acceptances have been discounted by that institution the nominal value of the bills held should be deducted from the nominal amount of the bills issued under the facility and a corresponding on balance sheet entry made.
1.9.2 Transaction related contingents These exposures relate to the on-going trading activities of a counterparty where the risk of loss to the reporting institution depends on the likelihood of a future event which is independent of the creditworthiness of the counterparty. They are essentially guarantees that support particular non financial obligations rather than a customer's financial obligations. Include here:
•   Advance payment guarantees
•   Performance bonds including bid or tender bonds, warranties and indemnities (indemnities given for lost share certificates or bills of lading and guarantees of the validity of papers rather than of payment under certain conditions should be reported here);
•   Stand by Letters of Credit relating to a particular contract or to non financial transactions (including arrangements backing, inter alia, subcontractors' and supplier's performance, labour and materials, contracts and construction bids).
1.9.3 Trade related contingents Report short term self-liquidating trade related items such as documentary letters of credit issued by the reporting institution that are collateralised by the underlying shipment i.e. the credit provides for the reporting institution to retain title to the underlying shipment. L/C's issued without provision for the reporting institution to retain title to the underlying shipment should be reported under direct credit substitutes above.
1.9.4 Sale and Repurchase Agreements Only report here sale and repurchase agreements where the asset sold is not reported on the balance sheet. Where the asset is off balance sheet, the appropriate counterparty weighting is determined by the issuer of the security and not according to the counterparty with whom the transaction has been undertaken.
1.9.5 Forward Assets Purchases The appropriate counterparty weighting should be determined by the asset to be purchased and not the counterparty with whom the contract has been entered into. Include commitments for loans and other on balance sheet items with certain drawdown. Exclude foreign currency spot deposits with value date of up to two working dates after trade date.
1.9.6 Forward Deposits Placed Relates to agreements between two parties whereby one will pay and the other receive an agreed rate of interest on a deposit to be placed by one with the other at some pre-determined rate in the future. The weight should be determined according to the counterparty with whom the deposit will be placed. Exclude foreign currency spot deposits with value date of up to two working dates after trade date.
1.9.7 Uncalled partly-paid shares and securities Only include here if there is a specific date for a call. If there is no specific date for a call, the item should be included as a long term commitment under PIB 1 Item No. 1.9.10, "Other Commitments".
1.9.8 NIF's and RUF's Note issuance and revolving underwriting facilities should include the reporting institutions underwriting obligations of any maturity. Where the facility has been drawn down by the borrower and the notes are held by someone other than the Authorised Firm, the underwriting obligation should continue to be reported at the nominal amount.
1.9.9 Endorsement of Bills These should be reported at the full nominal amount, less any amount for bills which the institution now holds but had previously endorsed. Endorsement of bills not accepted by banks will attract the counterparty risk weighting of the issuer. If it has been endorsed by another bank, a reduced risk weighting applies.
1.9.10 Other Commitments All other undrawn commitments are reportable here, divided into commitments under and over one year.
1.9.11 Assets funded by restricted PSIAs The methodology for calculating exposures financed by PSIAs are, in principle, no different to calculating exposures for a reporting institution's self financed assets. All the guidance notes above apply in their entirety unless stated otherwise.
1.10 Deposits Separately identify deposits due to the financial institutions in PIB 1 Item No. 1.10.1. All other deposits are to be reported in the other deposit section, PIB 1 Item No. 1.10.2.
1.11 Tax Liability Report all items accrued and payable in respect of the Authorised Firm's current and future tax liabilities.
1.12 Provisions All specific and general provisions in respect of Loans and Advances and other receivables should be reported here. Exclude provisions against Islamic contracts which should be reported in PIB 1 Item No. 1.14.4 below.
1.13 Loan Capital and Hybrid Securities Report items such as subordinated loans drawn down by the Authorised Firm.
1.14 Liabilities arising from Islamic contracts Liabilities arising from Islamic contracts include advances received against Salam contracts (defined in Para 3 and 19 of FAS 7 issued by AAOIFI and Ijarah investment payables (refer to FAS 8 of AAOIFI). Report any provisions against Islamic contracts in item Form PIB 1, Item No. 1.14.4.
1.15.1 Creditors and other liabilities Report all items not included in any of the above, such as proposed dividends payable, sundry accruals and deferred income etc.
1.15.2 Derivative financial instruments and other trading liabilities Include, but are not limited to, liabilities arising out of positions representing the following instruments, recorded at fair value:

Forward and Futures contracts in Currencies, Interest rates and other financial assets
Forward rate agreements
Currency and interest rate swaps
Credit derivatives
Option contracts on currency, interest rate and other financial assets.

These derivatives include both the exchange-traded and over-the-counter versions.
1.17.1 Liabilities relating to Restricted PSIA Enter here the aggregate liabilities arising from the assets of restricted PSIA investment funds.
1.17.2 Other Enter the aggregate of all other off balance sheet liabilities here
1.18.1 Ordinary Shares Include in respect of this item the amount of ordinary share capital issued, reported at nominal paid up value. Do not report the unpaid element of partly paid shares or authorised but unissued share capital. Authorised Firms should exclude holdings in their own shares.
1.18.2 Preference Shares Fixed dividend share capital that ranks above ordinary shares in the event of liquidation. Report the value of the preference shares issued.
1.18.3 Partnership Capital and other Include here other types of equity which have the same properties of permanent share capital. This could include partnership capital accounts, capital items for unincorporated associations etc.
1.20 Share premium account Any amounts received by the authorised institution in excess of the nominal paid up value.
1.21.1 Asset revaluation reserve Enter amounts arising from the revaluation of assets for which it has been necessary to set up this reserve.
1.21.2 Goodwill and other reserves Enter amounts arising from purchased goodwill or other situations for which it has been necessary to set up this or any other reserve.
1.21.3 Investment Risk Reserve Prudential category 5 Authorised Firms should include in respect of this item the amount that is appropriated out of the income of investment account holders, after allocating the Mudarib share, in order to meet future losses attributable to investment account holders. Refer also to FAS 11 of AAOIFI.
1.21.4 Profit Equalisation Reserve Prudential category 5 Authorised Firms should include in respect of this item the amount appropriated out of the Mudaraba income, before allocating the Mudarib share, in order to maintain a certain level of investment returns for investment account holders and to increase owners' equity. Refer also to FAS 11 of AAOIFI.
1.22 Total Reserves Sum of PIB 1 Item Nos. 1.21.1 + 1.21.2 + 1.21.3 + 1.21.4.
1.24 Minority Interests Report amounts attributable to minority shareholders from the overall equity figure.
1.25 Total shareholders' equity Sum of PIB 1 Item Nos. 1.19 + 1.20 + 1.22 - 1.24.
1.26 Total liabilities and shareholders' equity Sum of PIB 1 Item Nos. 1.16 + 1.25
1.27 Client Money held or controlled by the Authorised Firm Total of all Client Money, as per COB 9.3, as at the reporting date.
1.27.1 of which, belonging to Segregated Clients Subset of Item No. 1.27 above.
The term Segregated Client is defined in COB A5.2.1(2).
1.28 Total Client Money held in Client Accounts Total of all Client Money held in Client Accounts as at the reporting date.
The term Client Account is defined in COB A5.4.1.
1.29 Insurance Monies held or controlled by the Authorised Firm Total of all Insurance Monies, as per COB 14.2, as at the reporting date.
1.29.1 Of which, segregated Subset of Item No. 1.29 above.
Insurance Monies segregation is detailed in COB 14.3. Segregated Insurance Monies is the total of all Insurance Monies less that amount affected by COB 14.3.12.
1.30 Total Insurance Monies held in Insurance Bank Accounts Total balance of all Insurance Monies held in Insurance Bank Accounts as at the reporting date. The term Insurance Bank Account is explained in COB 14.3.