Trade Credit Insurance and Trade Credit Takaful

Trade credit insurance and trade credit takaful protect businesses against the risk of non-payment of goods and services by buyers. For cross-border transactions, such protection also helps businesses manage country risk, thus opening up access to new markets. For banking institutions, trade credit insurance and trade credit takaful can also be used to manage non-payment risk associated with trade financing portfolio.

This policy document sets out–
(a) the approval process and requirements on the offering of trade credit insurance by a licensed insurer and trade credit takaful by a licensed takaful operator; and
(b) the treatment of trade credit insurance or trade credit takaful as credit risk mitigation (CRM) by a banking institution under the Capital Adequacy Framework applicable to it.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking