nature of the examination as shown in the letter; it is usually conducted by
five to eight examiners over a period of two to four weeks—or more, de-
pending on the size and the conditionof the bank. After concluding the
examination, the bank is rated by the OCC according to each of five impor-
tant parameters: Capital, Assets, Management, Earnings, and Liquidity
(CAMEL). A bank with a rating of 1 or2 is considered superior, and of
medium status if it is rated 3. A bank that is rated 4 or below is required to
agree to aMemorandum of Understanding(MOU) with the regulators, in
which the bank makes promises about how it will operate and fix its prob-
lems according to a preapproved time table in the future. Or if the bank is in
bad shape, it get aCease and Desistorder (C and D), and if not fixed, its
charter is revoked. It is also important to note that not all regulations are
tested every year and that in some years a particular focus is taken (for
example, if there is a high historic risk of flooding, the OCC examination
adds a close focus on flooding compliance). It is also interesting here to rec-
ommend that compliance with Shari’aa could be a part of this examination
process in cases when a bank chooses to include RF banking services as part
of their service to the public.
Box 7.2 is a copy of what a bank receives from the regulators in order
to prepare for the annual regulatory examination.
BOX 7.2: OCC REQUEST LETTER: FROM THE OCC
OFFICE TO THE BANK’S PRESIDENT:In order for us to prepare effectively for this supervisory activity, we
are asking you to provide the information listed in digital format. If
this is not practical or becomes inefficient for you, please provide cop-
ies of the requested documents. Other large items may be provided in
hardcopy form for return to the bank. Please indicate which items
should be returned to the bank.
Please make available the following upon our arrival on (date of
exam). Please forward any items marked by a check (X) to our South-
ern California–North Field Office by [deadline for submitting the
requested documents].
MANAGEMENT AND SUPERVISION
Unless otherwise stated, please provide the most recent informa-
tion on the following:&The Board packet. Any information included in the packet and
requested below need not be duplicated.182 THE ART OF ISLAMIC BANKING AND FINANCE