CIBAFI Submits Technical Recommendations on IFSB's Takaful Recovery and Resolution Framework
The General Council for Islamic Banks and Financial Institutions (CIBAFI) submitted its comments to the Islamic Financial Services Board (IFSB) on the Exposure Draft (ED) (GN-10) on the 'Guidance Note on Recovery and Resolution for Takaful Undertakings'.
Drawing upon expert insights from its diverse membership spanning more than 30 jurisdictions, CIBAFI's technical review identifies several areas for enhancement in the proposed regulatory framework. Key recommendations include:
• Expanding the guidance to explicitly address retakaful undertakings, recognizing their potential systemic significance within the Islamic financial ecosystem • Strengthening the principle of independent recovery by removing references to potential public sector support during takaful recovery processes • Enhancing clarity on Point of Non-Viability (PONV) indicators specific to Participants' Risk Funds through additional qualitative and quantitative criteria • Aligning terminology with existing IFSB takaful standards, particularly regarding capital structure references • Providing more detailed guidance on loss allocation principles across segregated takaful fund structures in bail-in scenarios
• Clarifying resolution authority procedures for outstanding qard treatment to ensure fair distribution of assets during resolution
'These recommendations reflect CIBAFI's ongoing commitment to supporting the development of robust regulatory frameworks that enhance stability while preserving the unique characteristics of Islamic financial institutions. The proposed enhancements aim to promote greater consistency, transparency, and Shariah compliance in takaful recovery and resolution mechanisms across jurisdictions.', said CIBAFI in its statement.
The complete detailed comments submitted to IFSB are available on CIBAFI's website: www.cibafi.org.
CIBAFI continues to support the Islamic Financial Services Industry through advocacy, global representation, and various initiatives, including specialised publications and comprehensive professional development programmes.
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