Risk Management Framework for Shari’ah Compliant Banking

Banks must define and set the objectives of, and criteria for, investments using profit sharing instruments, including the types of investment, tolerance for risk, expected returns and desired holding periods. 11.3 Banks must have, and keep under review, policies, procedures and an appropriate management structure for evaluating and managing the risks involved in the acquisition of, holding and exiting from profit sharing investments. Banks shall ensure proper infrastructure and capacity are in place to monitor continuously the performance and operations of the entity in which Banks invest as partners. 11.4 Banks must identify and monitor the transformation of risks at various stages of investment lifecycles, for example, where the investee's business involves innovative or new products and services in the marketplace. Banks that employ different financing at different contract stages shall have appropriate procedures and controls in place, as different stages may give rise to different risks. 12. Effective Date This framework shall be effective on 03 March 2024.