Bank Negara Malaysia Issues Policy Document On Trade Credit Insurance And Trade Credit Takaful.

5 June, 2019

 

Bank Negara Malaysia ("BNM") issued a policy document on Trade Credit Insurance and Trade Credit Takaful ("PD") which took effect on 3 May 2019.
 
References to trade credit insurance or trade credit takaful in the PD refers to insurance or takaful cover that protects: 

 

1. sellers against the risk of non-payment of goods and services by buyers; or
2. banking institutions from risk of non-payment associated with their trade financing portfolio. 

 

The PD: 

 

1. sets out the approval process and requirements on the offering of trade credit insurance by a licensed insurer and trade credit takaful by a licensed takaful operator;
2. sets out the treatment of trade credit insurance or trade credit takaful as credit risk mitigation ("CRM") by a banking institution under the Capital Adequacy Framework applicable to it; and
3. supersedes paragraph 3 of Part B of the circular on Pengeluaran Bon/Jaminan Kewangan oleh Penanggung Insurans (BNM/RH/CIR/003-7) issued on 11 August 2007.

 

For further information, please contact:

 

Putri Noor Shariza Noordin, Partner, Shearn Delamore & Co​

shariza@shearndelamore.com