Financial Products under Islamic Law

TOTAL DEPOSITS UNDER THE ISLAMIC LAWS.

(a) Current accounts under the Al-Wadiah Yad Dhamanah principle.
Under this principle, the bank accepts deposits from its customers who look for safe custody of their money while still retaining the absolute convenience in their usage. The customer is permitted to withdraw the whole funds or part of the balances standing to their credit, at any time they wish to do so. The bank guarantees the return of these balances upon request by its customers. As in conventional banking, the bank will provide its customers with cheque books for their use.
As long as the funds/deposits remain with the bank, the bank may utilize these funds with the
permission of its customers. All the profits/gains generated from the use of these funds belong
to the bank,. The bank may, at its own discretion, levy service charge on the current for servicing and maintaining the account. The current account holder must ensure that there is sufficient funds in their account, otherwise the bank reserves the rights to impose a penalty charge for those cheques returned due to insufficient fund, as in conventional banking.
Note : Current account deposits are covered under the Unclaimed Moneys Act 1965.

(b) Savings account under the Al-Wadiah Yad Dhamanah principle.
Savings deposits are accepted by the bank under similar principle as the current account deposits, but with a slightly different concept in regards to the payment of profit.
The bank accepts savings deposits from its customers seeking for safe custody of their funds but who prefer to retain a certain degree of convenience in their usage of funds together with a likelihood of making some profits.
As in the current account, the bank acts as the guarantor or custodian for the customers. It guarantees the repayment of the money due to its customers in the depositors’ accounts upon demand. The bank provides the depositors with savings passbooks as in the conventional banking system. The customers may withdraw a part or the whole lump sum of their credit balances at any time they desire to do so. The bank seeks the permission of its customers to make use of their money in the accounts as long as the funds are still deposited with the bank concerned. All the profits earned from the usage of the funds shall go to the bank. However, the bank may in its own discretion make some distribution to the customers part of the profits generated from the use of the latter’s funds.
Similarly, these savings accounts also covered under the Unclaimed Moneys Act, 1965.

(c) General Investment Account under the Al-Mudharabah principle.

If a customer is looking for investment opportunities for their funds, he may approach the bank and place with it the money for a specified tenure. Quite similar to the conventional banking, the bank may accept the funds for say, 1, 3, 6, 9, 12, 15months or over as the customer desire.
Under this principle, the bank provides the so called “entrepreneurship” and the depositors, i.e. the customers provide the “capital”. The distribution of profits (if any) generated will be agreed upon by both the bank and the depositors. The depositors do not get involved in the management of the investment undertaken by the bank. However, in the event of a loss, the depositors, not the bank shall responsible for all the loss suffered.
Profit distribution (if any) will be made based on the pre-determined ratio as stated in the investment certificate under the General Investment account.
Deposits accepted by the bank under this account are also under the ambit of the Unclaimed Moneys Act, 1965.