PER is a reserve to accommodate the pool’s abnormal yield fluctuations.
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PER will be maintained at the Bank’s discretion, and the accumulated balance shall not exceed 30 percent of Islamic Banking Equity or as per the State Bank of Pakistan’s directives from time to time.
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Creation and movement of Profit Equalization up to a specific limit will be approved by the designated authority of the Bank.
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The periodic contribution into the reserve shall not exceed 2 percent of Net Income.
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50 percent of the reserve’s balance will be disclosed as reserve, whereas the remaining 50 percent will be disclosed as a liability in the Bank’s balance sheet.
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Reserve funds will be invested in SLR eligible securities such as Sukuk and other similar instruments.
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Profits/returns earned from such investments will be credited to the PER account, and the Mudarib/Bank’s share shall not exceed 10% of such returns.
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The Bank may fully or partially utilize the reserve when the pool’s profit is less than the expected returns for depositors.
IRR is a reserve to accommodate the credit and market risk of financing and investments, such as unusually large write-offs and/or significant losses on the sale of the pool’s investments, or as per the Bank’s policy / State Bank of Pakistan’s directives from time to time.
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IRR will be maintained at the Bank’s discretion or as per the State Bank of Pakistan’s directives from time to time.
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Creation and movement of Investment Risk Reserves up to a specific limit will be approved by designated officials of the Bank duly authorised by ALCO.
Any amount above the specified limit will require ALCO approval. -
The reserve’s balance will be disclosed as a liability in the Bank’s balance sheet.
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Reserve funds will be invested in SLR eligible securities such as Sukuk and other similar instruments.
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Profits/returns earned from such investments will be credited to the IRR account, and the Mudarib/Bank’s share must not exceed 10% of the profit/return.
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In case of losses incurred by the pool, these will be covered from the available IRR balance.
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Contribution to IRR shall not exceed 1 percent of the profit available for distribution among the pool’s depositors after deduction of Mudarib share, or as per SBP directives issued from time to time.