Class notes ISLAMIC FINANCE PRODUCTS AND SERVICES Islamic Financial Products, ISBN: 9783030176242
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Course
ISLAMIC FINANCE PRODUCTS AND SERVICES
Institution
ISLAMIC FINANCE PRODUCTS AND SERVICES
Book
Islamic Financial Products
Summary of Islamic banking products and services in Malaysia and the regulations behind it that make you understand the concepts and reasons in short time. Excellent for exam study and presentations.
3.1 ISLAMIC BANKING MARKETS
Introduction on Related The Forms of Islamic FInancial Institution (IFI) s growth via :-
Environments for Islamic 1)Local Islamic Bank
Banking Products/Services 2)Islamic Subsidiary of conventional bank
for Sources of Funds 3)Development Financial Institution
4)Islamic Banking Window5)
Islamic Investment Bank
6)Takaful company
CA/SA/ term deposit Unrestricted/ restricted Paid up capital/ retained earning/
investment acc tier II capital/ others
3.2 IFSA was made to separate deposit accounts from investment accounts.
Islamic Section 2 of the IFSA says that an "Islamic deposit" is a sum of money that is accepted or paid based on
Deposit Account Shariah.
(a) on the condition that it will be paid back in full, either on demand or at a time and place agreed upon by
the person giving the money and the person receiving it; or
(b) under an agreement with terms that say the person who paid the money won't get less than that amount
from the agreement's proceeds.
1) What is a savings, checking, or term deposit account? A deposit account is a place where a customer can
keep their cash or money and may or may not make money on the cash or money they put in.
2) Why does a bank care? One of its banking products is a way for it to get money to run its business.
3) What does it mean to a client? A safe place to keep or invest his cash or money where he can also use it
at any time or when it comes of age.
Income/Return Based on applicable contract Interest – Fixed & Pre- determined
Wadiah – No Income/Return - Subject to revision
Qard – No Income/Return
(Bank can give “hibah” under Wadiah &
Qard contracts at its discretion)
Murabahah – Sale-based/Profit
Related Terms & Principal Amount is fully guaranteed under the Both principal and interest are
Conditions contracts of Wadiah, Qard and pre-determined and guaranteed
Murabahah/Tawarruq
- Bank cannot offer any incentives in the forms The bank can offer incentives to
of gift/promotional items/attractive benefit etc. attract new depositors.
to attract depositors, under the contract of
Wadiah & Qard.
-It is allowable under Murabahah
3.2.1 Wadiah is a custodianship based on the principle of trust (amanah) where the custodian is not subject to
Deposit Products - Wadiah any liability, except in case of negligence. A custodian is not entitled to any benefits, profits and no right to
Contract utilize the asset. The asset has to be returned whenever required by the owner.
2 types of wadiah contract:
1- wadiah yad amanah ( trust safe custody)
2- wadiah yad Dhamanah (guaranteed safe custody)
Required features by islamic banking
1- funds mixed together
2. Funds utilized by islamic banks
3. Imposition of service charges
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