Prudential Standards on Securitisation Transactions for Islamic Banks

While significant benefits may be derived from involvement in securitisation exposures, securitisation may expose Islamic banking institutions to potential risks. In this regard, this standards which is applicable to activities that give rise to securitisation exposures, has the following objectives:
i. outlining the role and responsibilities of the board of directors and the senior management of Islamic banking institutions involved in securitisation activities; and
ii. specifying best practices with respect to general risk management framework.

While the risk management requirements are in most cases more relevant to Islamic banking institutions that assume primary roles in securitisation transactions, Islamic banking institutions that assume only secondary roles and as investors shall also observe the requirements where applicable. In most instances, Islamic banking institutions should be able to leverage on their existing infrastructure to comply with the requirements. Islamic banking institutions should comply with all requirements outlined in the standards on an ongoing basis, unless an exemption or deviation from specific requirements is given by the Bank.

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