Mudarabah - Appendices

Transcription

1. BNM /RH/STD 028-8 Mudarabah Islamic Banking and Takaful Department Page 52/64 APPENDICES Appendix 1 1. Legitimacy of mudarabah The legitimacy of the mudarabah contract is derived from the Quran, and founded on the Sunnah of the Prophet Muhammad (peace be upon him), and the consensus of Muslim jurists (Ijma’). The Quran 2. The following verse of the Quran implies the general permissibility of commercial venture including mudarabah. (i) ِ ‫ض ِربُو َن ِِف األ َْر‬ ‫ض ِل اللَّ ِه‬ ْ َ‫ض يَْبتَ غُو َن ِم ْن ف‬ ْ َ‫َوآَ َخ ُرو َن ي‬ “…and others travelling in the earth in quest of Allah’s bounty...”60 The word (‫ن‬ َ ‫ض ِربُو‬ ْ َ‫ )ي‬in the verse implies permissibility to travel in managing wealth to seek the bounty of Allah SWT which may take the form of mudarabah. The Sunnah of The Prophet Muhammad (peace be upon him) 3. ‫ كان العباس بن عبد املطلب إذا دفع ماال مضاربة اشرتط على صاحبه‬:‫عن ابن عباس قال‬ ‫ فإن فعل فهو‬،‫ وال يشرتي به ذات كبد رطبة‬،‫ وال ينزل به واديا‬،‫أن ال يسلك به حبرا‬ .‫ فرفع شرطه إىل رسول اهلل صلى اهلل عليه وسلم فأجازه‬،‫ضامن‬ “Ibnu Abbas (may Allah be pleased with him) reported that: “When Abbas Ibn Abd al-Muttalib gave his property to someone for mudarabah, he stipulated conditions for his partner not to bring the capital onto the sea; and not to bring with him the capital crossing a valley; and not to buy 60 Surah al-Muzzammil, verse 20. Issued on: 20 April 2015
2. BNM /RH/STD 028-8 Islamic Banking and Takaful Department Mudarabah Page 53/64 livestock with the capital; and if his partner violates the conditions, he should guarantee the loss occurred. These conditions have been brought to the attention of Prophet Muhammad (peace be upon him) and he approved them.”61 4. ‫ ( ثالث‬:‫ قال رسول اهلل صلى اهلل عليه وسلم‬:‫عن صاحل بن صهيب عن أبيه قال‬ ) ‫ البيع إىل أجل واملقارضة وأخالط الرب بالشعري للبيت ال للبيع‬:‫فيهن الربكة‬ “Suhayb (may Allah be pleased with him) reported that the Prophet Muhammad (peace be upon him) said: Three matters that have the blessing (of Allah): A deferred sale, muqaradah (mudarabah), mixing wheat with barley for domestic use and not for sale.”62 Consensus of The Muslim Jurists (Ijma’) 5. The Muslim jurists have reached Ijma’ among them on the permissibility of the mudarabah contract. Remainder of this page is intentionally left blank 61 62 Al-Bayhaqi, Al-Sunan al-Kubra, v. 6, p. 111. Ibn Majah, Sunan Ibn Majah, hadith no. 2289. Issued on: 20 April 2015
3. BNM /RH/STD 028-8 Appendix 2 Islamic Banking and Takaful Department Mudarabah Page 54/64 Glossary Terms Definition Hibah A transfer of ownership of an asset from a donor to a donee without any consideration. Mudarabah asset Asset created under a mudarabah venture. Mudarabah venture Business or profit generating activities undertaken by mudarib in managing capital provided by the rabbul mal. Mudarib Entrepreneur of a mudarabah venture. Mudarib yudarib Mudarabah contract where the rabbul mal invests his capital with a mudarib who subsequently invests the fund with another mudarib. Musyarakah A partnership between two or more parties, whereby all parties will share the profit and bear the loss from the partnership. Profit sharing ratio The ratio in which the profits are shared between the rabbul mal and mudarib. Rabbul mal Capital provider. Wa`d A promise or undertaking which refers to an expression of commitment given by one party to another to perform certain action(s) in the future. Wadi`ah A contract by which an asset is placed with another party for safekeeping. Wakalah A contract in which a party as principal authorizes another party as his agent to perform a particular task in matters that may be delegated, with or without imposition of a fee. Issued on: 20 April 2015
4. BNM /RH/STD 028-8 Appendix 3 Islamic Banking and Takaful Department Mudarabah Page 55/64 Related Shariah rulings and policy documents 1. Investment Account 2. Shariah Advisory Council (SAC) rulings published by the Bank63; 3. Guidelines on Corporate Governance for Licensed Islamic Bank; 4. Guidelines on Corporate Governance for Development Financial Institutions; 5. Shariah Governance Framework for Islamic Financial Institutions; 6. Rate of Return; 7. Musyarakah; 8. Guidelines on Financial Reporting for Islamic Banking Institutions; 9. Guidelines on Financial Reporting for Development Financial Institutions; 10. Capital Adequacy Framework for Islamic Banks – Disclosure Requirements (Pillar 3); 11. Guidelines on Product Transparency and Disclosure; 12. Capital Adequacy Framework for Islamic Banks (Capital Components); 13. Guidelines on Property Development and Property Investment Activities by Islamic Banks; 14. Guidelines on Investment in Shares and Interest-in-Shares and Collective Investment Schemes for Islamic Banks; 15. Single Counterparty Exposure Limit; and 16. Applicable Malaysian Financial Reporting Standards (MFRS). Remainder of this page is intentionally left blank 63 Including Shariah resolutions in Islamic Finance, standards, circulars or any directive pertaining to Shariah matters issued by the Bank. Issued on: 20 April 2015
5. BNM /RH/STD 028-8 Appendix 4 1. Islamic Banking and Takaful Department Mudarabah Differences in the role of IFI in mudarabah IFI’s role as a rabbul mal • • IFI as IFI provides capital to mudarib IFI shares profit with mudarib Mudarib  can be an existing entity or an SPV  uses funds for business activities Rabbul Mal 2. Page 56/64 IFI’s role as a mudarib • • Investor places fund to IFI Investor shares profit with IFI IFI as Mudarib Investor as Rabbul Mal 2 1 1 RA UA Asset Asset P/L P/L Restricted Investment Account (RA) – capital provided by investor is invested into specific assets as determined by investor. 2 Unrestricted Investment Account (UA) – capital provided is invested into assets determined by the IFI. Issued on: 20 April 2015
6. BNM /RH/STD 028-8 Appendix 5 Mudarabah Islamic Banking and Takaful Department Mudarabah venture (providing capital via cash) Diagram 1: Provide funding for a specific purpose in a company Company (ie. the Mudarib) with various business segments Provide capital IFI Specific business segment Diagram 2: Provide funding for a special purpose vehicle (SPV) Provide capital IFI Entity (ie. the Mudarib such as SPV) Remainder of this page is intentionally left blank Issued on: 20 April 2015 Page 57/64
7. BNM /RH/STD 028-8 Appendix 6 Islamic Banking and Takaful Department Mudarabah Page 58/64 Mudarabah involving multiple rabbul-mal Single PSR structure Rabbul Mal A Rabbul Mal B Single PSR 50:50 Mudarabah venture • Mudarib manage business Rabbul Mal C Multiple PSR structure Rabbul Mal A Rabbul Mal B Different PSR PSR 60:40 PSR 50:50 PSR 70:30 Mudarabah venture • Mudarib manage business Rabbul Mal C Remainder of this page is intentionally left blank Issued on: 20 April 2015
8. BNM /RH/STD 028-8 Appendix 7 Islamic Banking and Takaful Department Mudarabah Page 59/64 Proper distribution of profit and loss when mudarib injects capital Example: Musharakah between mudarib & mudarabah venture IFI 90% capital Mudarabah venture funded under mudarabah PSR 50:50 Mudarib Funds injected by mudarib 10% capital Upon the mudarib injecting his own funds/capital into the business: 1. Musharakah is formed between the mudarib and the mudarabah venture 2. Profit /Loss: i) For the musharakah, loss shall be distributed according to the amount of capital contribution i.e. ratio of 90:10 and profit shall be distributed according to agreed terms and conditions; ii) Subsequently, for the mudarabah venture, loss shall be absorbed by the rabbul-mal and profit is to be calculated as per PSR i.e. ratio of 50:50. Remainder of this page is intentionally left blank Issued on: 20 April 2015
9. BNM /RH/STD 028-8 Appendix 8 Islamic Banking and Takaful Department Mudarabah Page 60/64 Dedicated structure Material Board Risk Management Committee (BRMC) Board Investment Risk Committee (BIRC) • Credit Committee (CC) Investment Committee (IC) • Review and ensure the effectiveness of policies and risk management framework • Provide recommendation to the Board for new or change in investment strategy • Set authorisation limit for investments • Oversight role to Investment Committee • Oversee the progress of investment activities • Approval of investment application • Provide recommendation related to investment proposal & strategy to BIRC • Oversight function & approval of investment within limit /strategy set Remainder of this page is intentionally left blank Issued on: 20 April 2015
10. BNM /RH/STD 028-8 Appendix 9 Islamic Banking and Takaful Department Mudarabah An example of complex structure in mudarabah IFI Capital Project/ Construction Appoint observer (board/management/project) at the entity/entities that: • Conducts the actual business activity; and/or • Has control over the actual business activity Remainder of this page is intentionally left blank Issued on: 20 April 2015 Page 61/64
11. BNM /RH/STD 028-8 Islamic Banking and Takaful Department Mudarabah Page 62/64 Appendix 10 Prudential limits and requirements64 based on sources of funds Policy Guidelines on Property Development and Guidelines on Single Property Investment Activities by Islamic Banks Investment in Shares Counterparty and Interest-in- Exposure Shares and Limit (SCEL) Collective Investment for Islamic Sources Schemes for Islamic Banking of funds Banks Institutions  Aggregate book Treatment of Document Use of Permissible Investment General structure to in each real value of exposures Investment participate in estate investment in funded by Account property business shares, interest- RA and UA (GIA) is development shall not in-shares, CIS as per para limited up to activities exceed 25% and immovable 8.5 and 8.6 15% of total  Must be of IFI’s total properties shall of the policy not exceed 50% document 65 GIA fund of through joint- capital IFI for venture or of IFI’s total funding real equity capital estate participation business with reputable value of property investment in development shares & interest- companies in-shares shall not that are not exceed 25% of subsidiaries IFI’s total capital 65  Aggregate book 65 of the IFI RA Not 66 Exempted Exempted Exempted applicable Excluded 67 for IFI as mudarib UA Applicable Applicable Applicable Exempted Excluded for IFI as mudarib 64 65 66 67 Subject to changes in respective policy documents. Total capital as per defined in the Capital Adequacy Framework for Islamic Banks (Capital Components) RA funds which are off-balance sheet. For IFI which places RA/UA to another IFI, look-through approach shall apply. Issued on: 20 April 2015 67
12. BNM /RH/STD 028-8 Islamic Banking and Takaful Department Mudarabah Page 63/64 Appendix 11 Distress assessment process flow Monitoring of mudarabah venture Performance matches expectation Normal monitoring requirements Performance below expectation Exit (Cut loss limit) Perform distress assessment Exit Retain mudarabah venture Implement turnaround strategy and more vigorous monitoring requirements Remainder of this page is intentionally left blank Issued on: 20 April 2015
13. BNM /RH/STD 028-8 Islamic Banking and Takaful Department Mudarabah Page 64/64 Appendix 12 Illustration of additional financial disclosure for mudarabah venture Notes to Account Amount funded by: Unrestricted Investment Accounts (UA) x Restricted Investment Accounts (RA) Shareholders' fund x x xxx Mudarabah Sector Initial capital (RM’000) Losses/Impairment Provisions (RM’000) Amount as at 31 Dec 20XX (RM’000) Property xxx xxx xxx Manufacturing xxx xxx xxx Total xxx xxx xxx Remainder of this page is intentionally left blank Issued on: 20 April 2015