Accounts – Cash Management

It provides the account holder with a guarantee on the principal amount deposited. The account holders are not entitled to receive profits and are not responsible for losses. Islamic financial institutions provide various finance products to aid with the management of corporations’ cash flows and maintenance of business accounts.

Types of Arrangements

Term Deposit Account

It is where account holders seek return on their investments and it is structured using the Mudaraba arrangement. The bank allocates the amount into different pools, which are then invested in Shariah-compliant businesses. The profits are shared between the depositor and the bank according to a pre-determined ratio specified in the contract.

Commodity Murabaha Term Deposit Account

It is an Islamic fixed deposit account that is based on the Commodity Murabaha (cost-plus sale) structure. It involves the Islamic bank buying a commodity as per the accountholder’s request, after receiving the deposited funds to make the purchase. The accountholder may then sell the commodity back to the Islamic bank at a cost-plus profit basis as per the agreement. The proceeds of the sale will be received by the accountholder on deferred terms.

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.

Cash Management Services

Islamic banks also offer clients with comprehensive as well as tailor-made cash management solutions in order to assist them with regard to managing accounts, receivables, payables, cheque issuances etc and making it easier for businesses to face cash flow and liquidity challenges.


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