Basic indicator approach: GI is defined as an average, and the formula divides it by n again

BBR 7.6(2) sets the operational risk capital requirement as GI x alpha / n. GI is defined as "the Bank's average annual gross income" for the years (out of the previous 3) in which it is positive, and n is the number of those years. The average is therefore divided by n a second time, and the result falls as the number of positive years grows: with gross income of USD 50 million in each of three years the requirement is 50 x 15% / 3 = USD 2.5 million; with USD 50 million in one year and losses in the other two it is USD 7.5 million. Sub-rule (3) speaks of excluding loss years "from both the numerator and denominator when calculating the average". The difference concerns the operational risk component, which enters risk-weighted assets at 12.5 times the requirement (BBR 4.7(2)(b)), not the whole capital requirement. IBB 9.10(2) has the same formula and definition. Carried through to the capital ratios: for a bank with gross income of USD 50 million in each of three years, other credit risk-weighted assets of USD 450 million, a market risk requirement of USD 4 million and Total Capital of USD 45 million, the requirement under 4.9 is USD 42.5 million as printed and USD 47.5 million if gross income is averaged once, so the bank meets or breaches the 8% Total Capital ratio depending on the reading (8.47% against 7.58%). The AFSA return (Annex 1.13 of the Manual for Preparation of Returns) computes a single "Average GI" over the positive years and does not divide it by n again.

Proposed correction

Please confirm that the requirement is meant to equal alpha times the average of the positive annual gross income figures. If so, please define GI in BBR 7.6(2) and IBB 9.10(2) as the sum of those figures, or delete the division by n.

Jurisdiction

Kazakhstan — AIFC

Act

AIFC Banking Business Prudential Rules (BBR), V6

Place

BBR 7.6(2), definition of GI

Record

Discrepancy

Class

Text of the act

Where it arose

The text of the act

Arxo's conclusion

Confirmed

Official text

Unchanged at last check

Last checked

2026-10-24

Evidence

Reproduced by execution. Quotations are verbatim from the official material; translations are ours and marked.

GI is the Bank’s average annual gross income (as defined in sub-rule (3) or (4)) for those years (out of the previous 3 years) for which the Bank’s annual gross income is more than zero.

n is the number of years out of the previous 3 years for which the Bank’s gross income is more than zero.

figures for any year in which the annual gross income of a Bank is negative or zero must be excluded from both the numerator and denominator when calculating the average.

GI is an Islamic Bank’s average annual gross income (as defined in sub-rule (3) below) for those years (out of the previous 3 years) for which an Islamic Bank’s annual gross income is more than zero.

How to check it without Arxo's tools

1. Open AIFC Banking Prudential Rules_V6 (with amendments as of 13 April 2025, which commence on 13 October 2025) and find BBR 7.6(2) definition of GI, p.71 (formula is an image-like fraction GI*alpha / n on the same page); BBR 7.6(2) definition of n; BBR 7.6(3). Compare the text with the quotation above. A copy is kept in this register: 6384caa7b1938818-bbr_v6_13.10.2025_ma.pdf (SHA-256 6384caa7b19388180b780ec19044e1261cae3021c63c670f14ceb35285107022, copy of the official file).
2. Open AIFC Islamic Banking Business Prudential Rules and find IBB 9.10(2), p.123 (same fraction GI x alpha / n). Compare the text with the quotation above. A copy is kept in this register: e8b3c15b1ff574fd-aifc-islamic-banking-business-prudential-rules.pdf (SHA-256 e8b3c15b1ff574fd59504ade7cc9e0488ed5fa6ecfdc7816e3dc603bf4caedeb, copy of the official file).
3. The finding holds if the quoted passages read as shown and the comparison gives the result stated at the top of this page. If it does not, write to us with the record ID.

How this finding was made

AI agents read the official texts, turned the provisions concerned into executable rules and ran the comparison; they also drafted this record. A person at Arxo checked the finding and approved the report before it was sent (2026-10-27).

Responsible institutions

• Astana Financial Services Authority (AFSA) — author of the AIFC Rules

Reported to

Responses

No response recorded.

Documents and reproduction

• AIFC Banking Prudential Rules_V6 (with amendments as of 13 April 2025, which commence on 13 October 2025)
• AIFC Islamic Banking Business Prudential Rules

History

1. 2026-10-24Confirmed by Arxo
2. 2026-10-27Entered in the register
3. 2026-10-27Reported to Astana Financial Services Authority (AFSA) (e-mail)

Cite this record

Arxo Law, Arxo Findings Register, ARXO-2026-0120, https://arxo.io/findings/ARXO-2026-0120/ (status as of 2026-10-24). Data: ARXO-2026-0120.json.