Malaysia – Update To Capital Adequacy Framework (Capital Components) Documents.

Bank Negara Malaysia issued the Capital Adequacy Framework (Capital Components) (“CAF”) and the Capital Adequacy Framework for Islamic Banks (Capital Components) (“CAF-IB”). The CAF and CAF-IB came into effect on 5 February 2020 subject to the transitional arrangements set out in the respective policy documents.

The objective of the policy documents is to set out the approach for computing regulatory capital adequacy ratios, as well as the levels of those ratios at which financial institutions and Islamic financial institutions are required to operate. The framework was developed based on internationally-agreed standards on capital adequacy promoted by the Basel Committee on Banking Supervision.

The CAF supersedes the Capital Adequacy Framework (Capital Components) issued on 2 February 2018. The CAF-IB supersedes the Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 2 February 2018 and the Guidelines on the Recognition and Measurement of Profit Sharing Investment Account as Risk Absorbent issued on 22 July 2011.