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Bank Accounts

Islamic bank accounts offer similar day-to-day services as conventional banks and individuals can opt for current, savings or investment accounts as desired. However, as with all Shariah-compliant products, interest is absent and unless it is a current account where benevolent loans (Qard) are involved, marginal profits can be obtained in the savings and investment accounts as per the arrangement.

Types of Contracts

CURRENT ACOUNT

- It provides the account holder with a guarantee on the principal deposited. The depositor is not entitled to any profits and is not responsible for losses.

It is structured using Wadiah or Qard structures. Under Wadiah, the depositor deposits the money in the bank for safekeeping, who is liable for losses as a custodian when investing the monies. Under Qard, the money is also invested and the bank is obliged to return the principal on demand or as per the agreement.


SAVINGS ACCOUNT

It is designed to meet the requirements of customers who allow the bank to invest their deposits. The customers can deposit and withdraw money at any time and the actual profits are shared monthly at the ratio stated by the bank.

It is structured using the Mudaraba arrangement. The depositors act as the capital providers (Rab Al-Maal) and the bank acts as the Mudarib. The Mudaraba capital is the deposit which is invested in Shariah-compliant channels and the profits are shared according to the predetermined ratios, while losses are borne by the depositors.


INVESTMENT ACCOUNT

It allows customers to deposit certain sums of money with the bank throughout the year for fixed periods of time (one month, three months etc).

It is structured using the Mudaraba arrangement. The depositors act as the capital providers (Rab Al-Maal) and the bank acts as the Mudarib. The Mudaraba capital is the deposit which is invested in Shariah-compliant channels and the profits are shared according to the predetermined ratios, while losses are borne by the depositors.

It is also structured using Wakala (agency) where the bank acts as the agent (Wakil) and the depositors are the principals.

Banks

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