1 2 3 4 Question: Based on IFSB's supervisory discretion formula for profit sharing investment account (PSIA), Basel Ill requirements and details below, illustrate whether Bank X meets the minimum capital requirement (8% of RWA) a. if alpha is 0.3 b. If PSIA effectively becomes a pure investment carrying the full risk of credit loss c. If alpha is 0.3 but without profit equalization reserve S million) 3,000 750 2,000 2,000 1000 7 Paid-up share capital 8 Retained earnings 9 Tier 2 compliant sukuk murabahah 10 Short-term subordinated debt 11 Credit risk weighted assets 12 Credit risk absorbed by restricted PSIA 13 Credit risk absorbed by unrestricted PSIA 14 Market risk weighted assets 5 Operational risk weighted assets 100 RWA funded by profit equalization reserve of 16 unrestricted PSIA (credit risk) 17 Alpha (a) 18 0.3