Products – Saving or Deposit Products
1. Current account
(typically but terms may vary from bank to bank)
Customer:
- Deposits money which is guaranteed by the bank
- May be issued with a cheque book and a debit card
- Can withdraw money on demand
- May be required to gives consent for the deposit to be used in a manner that is compliant with Shariah principles
- Is not entitled to return or profit make on balances
Bank:
- Invests deposits in Shariah compliant activities at its own risk
- Guarantees repayment of deposit in whole or any part of outstanding balance upon request
- May give the customer a portion of the return on investment as a gift on description
- Usually does not charge for withdrawals
Islamic principle – Qard al wadeeah (free of profit loan)
2. Savings account
(typically but terms may vary from bank to bank)
Customer
- Deposits money but at shared risk with other depositors and bank share holders
- May be required to maintain a minimum balance in account
- May be allowed a certain number of withdrawals without penalty
- Shares profit and loss with other depositors and shareholders
Bank:
- Invests deposits in Shariah compliant activities at its own risk and the risk of the depositors
- Shares profit and loss with account holders
- Usually requires a minimum deposit
- May charge an annual service fee
- May charge for withdrawals beyond a certain number
Islamic principle – Mudaraba (contract between principle and agent)
3. Investment account / term deposit account
(typically but terms may vary from bank to bank)
Customer
- Deposits money but at shared risk with other depositors and bank share holders
- May be required to make a minimum opening deposit
- May be required to keep deposit over a predetermined period of time such as one, three, six or twelve months
- May be penalised for withdrawals before end of the period agreed
- Shares profit and loss with other account holders and shareholders
Bank:
- Pools funds into investment vehicles that are Shariah compliant
- Shares profits and losses with account holders
- Usually requires a minimum opening amount
- May charge an annual service fee