Islamic International Rating Agency

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Banks: Conventional and Islamic Rating Methodology

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The Islamic International Rating Agency provides ratings of all types for banks of all types on two scales: domestic (national) and international. The rating process and rating definitions are more fully described in IIRA’s introduction to ratings, of which this bank methodology is a part.

The comprehensive rating process employed by IIRA for financial institutions conforms to established global best practice. For Islamic institutions and products there is further cognizance of the constraints and mechanisms that distinguish such banks. Shari’a compliant products like Ijarah, IMB, Murabaha and Mudarabah have economic equivalents in conventional finance, but the definition and management of risk is different for Islamic institutions. To the extent the institution is a partner or equity investor, it may face greater entrepreneurial exposure. And, of course, its pricing is subject to commercial risk in that the post facto returns must be competitive with market levels.

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