103. Priority of deposit liabilities inter se

(1)

Notwithstanding the provisions of any written law relating to the winding-up of companies, in the event of a winding-up of an Islamic bank the deposit liabilities of that Islamic bank shall, amongst themselves, rank in the following order of priority —

(a)

deposit liabilities incurred by the Islamic bank with non-bank customers where the deposit liabilities are required by the

Authority to be included in the computation of the reserve and liquidity requirements under sections 44 and 45, as the case may be;

(b)

deposit liabilities incurred by the Islamic bank with other banks where the deposit liabilities are required by the Authority to be included in the computation of the reserve and liquidity requirements under sections 44 and 45, as the case may be;

(c)

deposit liabilities incurred by the Islamic bank with non-bank customers where the deposit liabilities are not required by the Authority to be included in the computation of the reserve and liquidity requirements under sections 44 and 45, as the case may be.

Islamic Banking

(2)

The deposit liabilities in each class specified in subsection (1)

shall —

(a)

rank in the order specified therein but as between deposit liabilities of the same class shall rank equally between themselves;

and

(b)

be paid in full unless the assets of the Islamic bank are insufficient to meet them in which case they shall abate in equal proportions between themselves.

(3)

For the purposes of section 102 and of this section, “deposit liabilities of an Islamic bank” means sums of money paid on terms —

(a)

under which they will be repaid either on demand or at a time or in circumstances agreed by or on behalf of the persons making the payments and the Islamic bank receiving them; and

(b)

which are not referable to the provision of property or services or to the giving of security, but shall not include, in the case of an Islamic bank incorporated in

Brunei Darussalam, liabilities of the Islamic bank arising from financing —

(i)

granted by creditors whose claims are fully subordinated to the claims of all un-subordinated creditors; and

(ii)

the terms of which comply with the criteria for the treatment of the liabilities as capital in the computation of the Islamic bank’s capital adequacy ratio under section 11, whether or not the entire amount of such liabilities are treated in the computation as capital.

(4)

For the purposes of subsection (3)(b), money is paid on terms which are referable to the provisions of property or services or to the giving of security if —

(a)

it is paid by way of advance or part-payment for the sale, hire or other provision of property or services of any kind and is repayable only in the event that the property or services is or are not in fact sold, hired or otherwise provided;

Islamic Banking 98

(b)

it is paid by way of security for payment for the provision of property or services of any kind provided or to be provided by the

Islamic bank by whom or on whose behalf the money is accepted; or

(c)

it is paid by way of security for the delivery up or return of any property.

Report

Read on from s 104

103. Priority of deposit liabilities inter se

Terms defined in s 2

Schedules