Central Bank of Bahrain

Waqf Fund holds its 11th Roundtable Discussion on Pool Management and Profit Distribution

Manama, Bahrain – 9 May 2018 – “Investment account holders contribute a large part of funds available to an Islamic bank; it is therefore appropriate that they are treated fairly and their rights are safeguarded under a robust framework covering pool management and profit distribution”. This was the main theme of the 11th Waqf Fund Roundtable Discussion held at the CBB premises. 24 senior Islamic bankers, Shari’ah scholars, CBB officials, representatives of leading audit firms and AAOIFI participated in the half-day event.

The Roundtable started with a detailed presentation from KPMG’s Mahesh Balasubramanian on the subject. He covered various aspects of the topic including market practices on asset allocation, profit distribution, Mudarib fee ranges, allocation of profit equalization reserve (PER) and investment risk reserve (IRR), etc. He mentioned the regulatory practices from various markets and compared them with the practices of Bahraini retail banks. He recommended consolidating all the disclosures related to investment account holders in one comprehensive report to be published annually as part of the annual report.

The participants raised various questions on key issues and the debated continued for several hours. Given the importance of the topic and the wide range of opinions present, it was concluded that further deliberation was required, perhaps by a committee formed for this purpose.     

The Chairman of the Waqf Fund Mr. Khalid Hamad stated, “It is clear from today’s discussion that the issue of investment account holders is a multi-faceted one, with Shari’ah, regulatory and other considerations. It should be handled appropriately to make sure that fair treatment is accorded to all the stakeholders of an Islamic bank.” He thanked the participants for attending the Roundtable and sharing their thoughts on the subject.  

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