IFSB produces new Islamic banking guidelines

The Islamic Financial Services Board (IFSB) has published new guidelines on capital adequacy for Islamic banks and risk management of takaful. The introduction of Basel III standards, which will be phased in over the coming years, has led to the new guidance. Revised guidelines detail the criteria for using sukuk as Tier 1 and Tier 2 regulatory capital, a practice that has been in operation this year in financial institutions in the United Arab Emirates and Turkey. Guidelines for takaful firms outline issues faced by Islamic insurers, including the risk that their products become non-compliant with sharia principles, and lays out best practice when it comes to supervising funds and disclosing information.