Purchase Without Recourse (PWOR)

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What is PWOR?

  • Cagamas purchases Islamic financing originated by Islamic financial institutions, Government or selected corporations on without recourse basis.
  • The Islamic financings are purchased at their book value i.e. the principal balance outstanding on a date which is closest to the purchase date but not earlier than the end of the month preceding the purchase date.
  • The selling institutions (Originator) are required to pay instalments (known as "Cagamas Instalments") at regular intervals. The required rate of return for the Company, which is based on the Cagamas Rate, forms the basis for determining the Cagamas Instalments.
  • In addition, Cagamas will appoint the Originator as its agent to carry out services e.g. collection of the instalments for an agreed Wakalah fee.


Type of Financings

The types of originated Islamic financings covered under the PWOR are as follows:

  • Islamic Home Financing
  • Islamic Vehicle Financing

Shariah Principles

  • Bai’ al-Dayn  (Debt Trading)
  • Bai’ al-Dayn al-Sila’ii (Debt Trading Using Commodities)

Key Features

  • Outright sale to Cagamas, no recourse for default risk
  • Standardized structure and documentation
  • Pricing from par to premium, depending on quality of assets
  • Cash purchase or settlement by Cagamas sukuk
  • Excess spread paid to seller as servicer fee
  • Originator will be appointed as Servicer for financings sold
  • Customers not affected


  • Transfer of credit and profit rate risks
  • Manage portfolio concentration risk
  • Reduce maturity mismatch
  • Full capital relief
  • Improve ROA and RWCR
  • Fast turnaround time
  • Competitive pricing
  • Improve earnings stability