University of Chittagong


Dept. of Finance

Course Code: FIN-507

Course Title : Islamic Finance
Dr. Begum Ismat Ara Huq
Professor, Finance, Faculty of Business
Administration, University of Chittagong
Contact : Mobile: 01716 469874
E-mail : ismathuq@[Link]

1
 Chapter – 3

Islamic Deposit Facilities

2
 Chapter 3 - Contents
• Concepts of Deposit Mobilization;
• Principles of deposit in Islamic Shari’ah
• Types of Deposits under Islamic Shariah;
• Different types of Account under Islamic banking
system
• Products and Services Of Islami Bank
Bangladesh Limited (IBB PLC)

3
 Concepts of Deposit Mobilization
• Deposit mobilization is the process of public
cash or funds accumulation by the f inancial
institutes via its different routes, for instance,
savings, current, f ixed deposit accounts and
other specialized schemes.
• Like interest-based conventional banks, the
m ai n f u n c ti on of I s l am i c b an k s i s to
mobilize savings and provide f in ancial
support to the entrepreneurs. Yet there are
differences in techniques applied in the
p r oc e s s of s av i n g s m ob i l i z ati on an d
f in ancing investment by the two banking
systems. Depositors receive interest in a
predetermined rate for their deposits made
with an interest-based bank. 4
 Concepts of Deposit Mobilization
• Islam disapproves hoarding of savings and
encourages its productive investment (Chapra 1985).
It puts emphasis on savings and the productive use
of savings. Thus, the bank assembles the small
deposits and savings of individuals into a common
pool and makes these deposits available for large
investment opportunities, ensuring the productive
use of society's savings.
• Islamic banking is a response to such exigencies.
It mobilizes savings of the common people in line
with Islamic Shariah . Techniques employed by
Islamic banks for saving mobilization are as
follows (Principles of deposit in Islamic Shari’ah) 5:
 Principles of deposit in Islamic Shari’ah
• Al Wadiah Account
• General Mudarabah Account
• Term Mudarabah Account
• Special Mudarabah Accounts;

• 1. Al Wadiah Account: The Islamic Banks received

deposits from the public in the form of Al Wadiah
Account. This is similar to the current/demand
account of the conventional banks. However, the
following are the main features of this account:
i) The bank acts as a trustee of the funds deposited6 ,
 Principles of deposit in Islamic Shari’ah
• ii) The Al Wadiah depositors agree to allow the
bank to invest their deposited funds in income
generating projects,
• iii) Depositors do not take the risk of losses with
such accounts; hence they are not also entitled
to any prof it . On the other hand, the bank is
entitled to all of the prof its, if any, as bank bears
all of the risk,
• iv) Such deposits are the short term funds of the
bank,
• v) Depositors are provided with a cheque book,
ATM Card where they can withdraw any amount7
STRUCTURE OF ISLAMIC CURRENT ACCOUNT:

8
 Principles of deposit in Islamic Shari’ah
• CALCULATIONS: CURRENT ACCOUNT BASED ON QARD
Basic Assumptions Alphabetical Equations
and Formulas
Particulars Unit Value
Total Amount Deposited by Depositor USD 100,000 D
Profit Rate allotted (fixed % of ) % Nil
Amount available on demand or USD 100,000.0 D
maturity
• 1. Let us take an example of Current Account where the total
deposits from the depositor is USD 100,000/-.
• 2. The customer deposits the amount with the Islamic bank
on Qard basis. Therefore, there will be no profit or loss sharing
between the depositor and Islamic Bank.
• 3. The amount available to the depositor on demand or on
maturity is USD 100,000. 9
 Principles of deposit in Islamic Shari’ah
• 2. General Mudarabah Account
• Islamic Banks received deposits from the public in
the form of general mudarabah account. Mudarabah
is a form of business contract where one party
supplies money and the other manages the business
by investing labor and time.
• Prof it generated from the venture are shared by
both parties in a proportion agreed upon at the time
of contract. However, in this arrangement the financier
is solely responsible for any loss that may be incurred.
• The f inancier of the business is known as sahib10al
mal rabbul mal or owner of capital and the manager
 Principles of deposit in Islamic Shari’ah
• business is called mudarib or entrepreneur.
• The following are the main features of General
Mudarabah account :
i) Banks receive deposits in such an account on the
basis of a mudarabah contract,
• ii) Funds deposited may be invested in Shariah
approved ventures by the bank directly or through
some other third party,
• iii) In this transaction, the depositor is the sahib al
mal and the bank is the mudarib.
• iv) Prof it sharing percentages are determined at
the inception of the contract. 11
 Principles of deposit in Islamic Shari’ah
• Any prof it earned in these investments is
distributed among the Mudarabah depositors at
a predetermined percentage and the bank
retains the residual amount as its profit.
• v) Mudarabah depositors do not share in the
other sources of income of the bank such as
prof it s from Al Wadiah Accounts, service
charges commission etc.,
• vi) The depositors are not also liable for any
losses or any expenses incurred from other
banking activities,
• vii) Islamic banks distribute profits among the 12
 Principles of deposit in Islamic Shari’ah
• mudarbah depositors on the basis of average
amount of money available in each depositor’s
account for a specified period of time,
• viii) If the loss incurred is due to the bank fault,
negligence or non-adherence of bank rules on
behalf of the bank or bank personnel, liability of
loss is the bank’s sole responsibility.
• ix) Mudarabah depositors are provided with
pass books and cheque books .
• General Mudarabah principle can also be
extended for Term Mudarabah and Special
Mudarabah Account.
13
 Principles of deposit in Islamic Shari’ah
• SAVINGS ACCOUNT BASED ON MUDARABA
Basic Assumptions Alphabetical Equations and
Formulas
Particulars Unit Value
Depositor’s Capital (Investment USD 200,000.0 C
Account)
Mudaraba Profit Sharing ratio % 30:70 x:y
Deposits Invested in Bank’s Assets USD 200,000.0 A
(Financed)
Net profit (Yield ) from Banks assets % 10.0 R
Profit earned from assets USD 20,000 P=A*R
* Available for Distribution
Bank’s Share of profit (30%) USD 6,000 BP=P*x
Customer’s Share of Profit (70%) USD 14,000 CP=P*y
Customer’s final return from Mudaraba % 7% NR=CP/C
14

Deposits (ROI)
 Principles of deposit in Islamic Shari’ah
• 1. Let us take an example of a Savings Account
where the total deposits from the client is USD
200,000/-.
• 2. The customer deposits the amount with the
Islamic bank on Mudaraba basis as a Rab-al-Maal
a nd t he I sl a m i c b a nk a c t s a s t he Mud a ri b
managing the deposits. The depositor and Islamic
Bank agreed to a prof it sharing ratio of 70:30.
Prof it s are shared as per the pre-agreed ratio;
however, losses if any shall be borne by the
depositor.
• 3. As per the current practice, funds raised from
Mudaraba deposits/ savings accounts are invested
in the bank’s assets and the underlying prof 15it s
generated from these assets are shared between
 Principles of deposit in Islamic Shari’ah
• depositors. The assets are earmarked against the
deposits and their performance is tracked and
prof its calculated accordingly. The bank provides
an indicative prof it rate and prof it sharing ratio to
the customers at the time of investment, whilst the
f inal prof its paid out are based on the actual return
generated from the underlying assets.
• 4. In this example, the Mudaraba deposits of USD
200,000 will be used for f inancing/investing in
Shariah compliant products which are booked in
the bank’s balance sheet.
• 5. For example, the underlying assets generate a
net return of 10%, which means a prof it of USD
20,000. Prof it = Deposit Amount * Rate of Return= 16

USD
 Principles of deposit in Islamic Shari’ah
• 200,000* 10%= USD 20,000 6. As per the prof it
distribution ratio, the prof it of USD 20,000 is
shared between the bank and the depositors as:
Bank’s share of prof it (30%) = 20,000*30%= USD
6,000. Customer share of prof it (70%) = 20,000*
70% = USD 14,000
• 7. The customer’s Net return from the Mudaraba
deposits will equal to 7%, working as follows:
Customer’s share of prof it/Mudaraba Deposits=
USD 14,000/USD 200,000= 7%.

17
 Principles of deposit in Islamic Shari’ah
• 3. Term Mudarabah Account : As the name implies,
term mudarabah account is meant for different periods,
which range from 3 months to 3 years. Islamic banks
received term deposits from the general public and also
from their clients. The following are the main features of
such account:
i) The banks are allowed to invest the deposited money in
the shariah approved ventures and share prof its/losses
with the depositors on the basis of agreed proportion,
ii) The depositors are not allowed to withdrawal their
money until the term of the account expires,
iii) The basic difference between a term mudarabah
account and a general mudarabah account is the
18
specified term of the deposits,
 Principles of deposit in Islamic Shari’ah
• 4. Special Mudarabah Account (INVESTMENT
ACCOUNT ) : When a bank receives a mudarabah
deposits for investment in some specif ic business,
sector, projects etc., the deposit is called special
mudarabah deposit.
• In this case, an Islamic bank, while receiving
d e p o si t s, c o m e s to an ag re e m e nt w i t h t he
depositors that the money to be received will be
invested in some specif ic business such as the
fertilizer or salt business; or some specif ic sector
like industrial sector, textile sector, international
business; or in some specific investment 19
 Principles of deposit in Islamic Shari’ah
• sector of the bank such as real estate or shipping or
a special project.
• This account enables customers to deposit specific
sums of money with the bank throughout the year
for specif ic periods of time (one month, 3 months,
6 months, 9 months or 12 months) with the option
to withdraw profits at specific times. It also enables
banks to hold some money for depositors and
invest on the basis of pre-agreed deposit tenure.
Islamic investment account is structured using the
Mudaraba and Wakala contracts.
• The main features of the special mudarabah
20
 Principles of deposit in Islamic Shari’ah
i) Prof it s/losses arisen from the specif ic types of
ventures are distributed among the bank and
depositors on the basis of agreed proportion,
ii) Such accounts can either be readily liquid or f ixed
for a specific term,
iii) Such deposits are invested into specif ic projects
which is stipulated in the contract,

21
 Principles of deposit in Islamic Shari’ah
• STRUCTURE OF ISLAMIC INVESTMENT ACCOUNT:

22
Principles of deposit in Islamic Shari’ah
Basic Assumptions Alphabetical Equations and
Formulas
Particulars Unit Value
Depositor’s Capital (Savings USD 500,000.0 C
Account)
Mudaraba Profit Sharing ratio % 30:70 x:y
Deposits Invested in Bank’s Assets USD 500,000.0 A
(Financed)
Net profit (Yield ) from Banks % 10.0 R
assets
Maturity Period YEARS 5 T
Profit earned from assets USD 250,000 P=A*R*T
-*Available for Distribution
Bank’s Share of profit (30%) USD 75,000 BP=P*x
Customer’s Share of Profit (70%) USD 175,000 CP=P*y
Customer’s final return p.a. from % 7% NR=(CP/
23

Mudaraba Deposits (ROI) C)/T

 Principles of deposit in Islamic Shari’ah
• 1. Let us take an example of Investment Account
where the Total deposits from the client is USD
500,000/-.
• 2. The customer deposits the amount with the
Islamic bank on Mudaraba basis as a Rab-al-Maal
and t he I sl am i c b ank ac t s as t he Mud ari b
managing the deposits. The depositor and Islamic
Bank agree to a prof it sharing ratio of 70:30. It is
agreed that the amount remains with the Islamic
bank for a period of 5 years. Prof its are shared as
per the pre-agreed ratio; however, losses if any
shall be borne by the depositor.
• 3. As per the current practice, funds raised from
Mudaraba deposits/savings accounts are invested 24

in the bank’s assets and the underlying prof it s

 Principles of deposit in Islamic Shari’ah
• from these assets are shared between the bank
and the depositors. The assets are earmarked
against the deposits and their performance is
tracked and prof its calculated accordingly. The
bank provides an indicative prof it rate and prof it
sharing ratio to the customers at the time of
investment, whilst the f inal prof it s paid out are
based on the actual return generated from the
underlying assets.
• 4. In this example, the Mudaraba deposits of USD
500,000 will be used for f inancing/investing in
Shariah compliant products which are booked in
the Bank’s balance sheet.
• 5. For example, the underlying assets generate 25a
net return of 10% p a for 5 years which means a
 Principles of deposit in Islamic Shari’ah
• USD 250,000. Prof it = Deposit Amount * Rate of
Return*Maturity Period= USD 500,000* 10%*5 =
USD 250,000
• 6. As per the prof it distribution ratio, the prof it of
USD 250,000 is shared between the bank and the
depositors as: Bank’s share of prof it (30%) =
250,000*30%= USD 75,000. Customer share of
profit (70%) = 250,000* 70% = USD 175,000
• 7. The customer’s Net return from the Mudaraba
deposits will equal to 7%, working as below:
[ C u s t o m e r ’ s s h a r e o f p r o f it / M u d a r a b a
Deposits)/Total Maturity Period] =
[(175,000/500,000)/5] = 7%.
26
 Different types of Account under Islamic
banking system
• There are two main bases of mobilization of
deposits by Islamic banks that are Current account
deposits and Savings deposits.
• Banks may also get permanent or redeemable
equity capital through investment deposits that
practically take the form of a running partnership
between the depositors. Depositors in Islamic
f in a n c e c a n b e c o m p a r e d w i t h
investors/shareholders in companies, who earn
dividends when the investment makes a prof it or
lose part of their capital if the investment posts a
loss.
27
• The contractual agreement between depositors
 Different types of Account under Islamic
banking system
• Islamic banks does not pre-determine any rates of
return, it only sets the ratio according to which
prof it s and losses are distributed between the
parties to the deposit contract.
• 1. Current Account deposits
• In Islamic banks, Current Account deposits are
based on the principle of Amanah / Wadiah or that
of Qard.
• In the f irst type, interest-free deposits are held by
the banks either in trust (Amanah), or in safe-
keeping (Wadiah).
• Under Amanah arrangement, the Islamic bank 28
treats the funds as a trust and cannot use these
 Different types of Account under Islamic
banking system
• operations; it does not guarantee the refund of the
deposit in case of any damage or loss to the
Amanah resulting from circumstances beyond its
control.
• In Wadiah, the bank is deemed as a keeper and
trustee of funds and has the depositors’
permission to use the funds for its operations in a
Shari´ah compliant manner. Deposits under
Wadiah take the form of loans from depositors to
Islamic banks and the bank guarantees refund of
the entire amount of the deposit. While these
deposits can be withdrawn at any time, the
29
depositors have no right to any return/prof it on
Different types of Account under Islamic
banking system
• Current Account deposits with Islamic banks can
also be based on the principle of Qard, in which
case the bank gets authority to use current
accounts funds as non-interest loans to invest in
its own operations.
• Current accounts with Islamic banks in case of
Q a rd a re si m i l a r to c urre nt a c c o unt s w i t h
conventional banks as regards the obligation of
the bank to return the credit balance upon demand.
The relationship between the depositor and the
bank is that of lender and borrower whereby the
client is simply the lender and the bank is the
borrower. 30
Different types of Account under Islamic banking
system
• such deposits even in the case of loss in its overall
business.
• If the bank indicates at the time of account
opening that it will invest the funds deposited
under current accounts at its own discretion in any
Shari’ah-compliant business, it can benef it from
these accounts without requiring passing on any
part of their profit to the depositors, as they are not
subject to risk.
• The bank will be liable for any possible loss and
the depositors are guaranteed full repayment of
the deposits, net of the service charge, if any.
Instead, such accounts may be eligible for gifts for31
Different types of Account under Islamic banking
system
• funds on a non-regular basis, which cannot be
seen as dividends.
• 2. Savings deposit accounts
• Savings deposit accounts operate in a different
way.
• The depositors allow the banks to use their money
invested in prof itable business ventures which are
legal and Shari´ah compliant.
• Generally, deposits in savings accounts are
ac c ep ted by I slam ic b anks on the b asis of
Mudarabah where the depositor is rabb-ul-mal
(investor) and the bank is the Mudarib (fund
manager). 32
Different types of Account under Islamic banking
system
• The prof it will be shared as per a pre-determined
ratio upon, while loss will be borne by the rabb-ul-
mal.
• Prof it distribution amongst the depositors and the
shareholders will be made according to the
weightage assigned usually at the beginning of
each month to their investments. Savings deposits
are generally put in a joint investment pool with
other deposits mobilized by the Islamic banks.
• 3. Investment deposits Account
• Investment deposits are accepted for a f ix ed
period of time or term and are governed by the
Mudarabah contract with the bank. When deposits
33
Different types of Account under Islamic banking
system
• agreed f ix ed term no withdrawal is normally
allowed until the end of the deposit term.
• However, some banks are allowing early
withdrawals in an agreed notice period. Term
deposits are arrangement where depositors seek
some return on their investments; they are taken
on a Mudarabah basis.
• These deposits are allocated to a number of
investment pools and the Islamic banks invest the
pooled amount in Shari´ah-compliant businesses.
• All direct expenses are charged to the respective
pools; the net proceeds are distributed between
the bank and the pools and then among the 34

depositors represented by the pool

Different types of Account under Islamic banking
system
• The profits from the assets are shared between the
depositors and the bank according to a pre-
determined ratio agreed upon at the outset.
• The prof it sharing weightages are assigned based
on the various tenures and the amount invested
under the arrangement. And as required under
Mudarabah, depositors have to be informed in
advance of the formula used for sharing the net
earnings of the investment pool with the bank.
• In case of the unlikely event of loss, the depositors
have to bear the loss on a pro-rata basis while
bank goes un-rewarded for all its efforts.
• If a bank contributes its equity capital in a pool at
the 35
Different types of Account under Islamic banking
system
• ti m e of se tti ng up an i nv e stm e nt p ool , the
relationship will be a combination of Musharakah
and Mudarabah, and the bank would be entitled to
a proportionate prof it on its own investment in
relation to the total Mudarabah investment pool.
• 4. Wakala Deposit:
• Wakala is an agency contract, where the account
holder (principal) appoints an Islamic f in ance
i nsti tuti on ( ag e nt) to c arry out i nv e stm e nt
activities claims that wakala “allows a much more
ef fic ient recycling of short-term liquidity in the
Islamic banking system”.
• Islamic banks and f in ancial institutions offer
wakala 36
Different types of Account under Islamic banking
system
• contracts in many different forms, including letter
of credit, Islamic monetary certif ic ate, Islamic
bonds, term deposit, and Islamic insurance.
• In wakala contracts, the actual prof it is distributed
according to the profit ratio agreed upfront.
• Bank (Wakil) is able to specify expected return
from customers’ deposit by investing into selected
instrument for an agreed wakil fee. The Wakil will
then make the investment to generate a return,
which is carried out for and on behalf of the
customers (Muwakkil).
• The Muwakkil specif ies the returns expected from
the investment, and Wakil is required to source an
investment to achieve the expected returns, after 37

deducting the wakil fees

Different types of Account under Islamic banking
system
• Any prof its exceeding the agreed returns will be
retained by the Wakil as additional incentive.
• Like any other investment, in case of default, the
Muwakkil shall bear all risks and losses except
those risks and losses resulting from the Wakil’s
misconduct or negligence.

38
Wakala Deposit Structure:

39
Different types of Account under Islamic banking
system
• Shariah Issues on Wakala Deposit Structure
• The mechanism, basically has fulf illed all the conditions
agreed by the scholars and has ensured just and
Shari`ah compliant transactions. However, there are
some issues that need to be highlighted in this contract.
• The wakala contract has been criticized for conf lict of
interest and it may cause allegation (tuhmah) against an
agent. The issue exists where the agents act against the
interests of their principals. This problem is commonly
referred to as an agency problem, which occurs when the
objectives of the owner do not coincide with the
objectives of their agents.
• Furthermore, no physical commodity is required under
wakala contract. This raises the question of whether
wakala is an ef ficient governance structure in terms of 40
risk and control.
Different types of Account under Islamic banking
system
• A Wakala Treasury Deposit Account from Al Rayan
Bank
• The account is operated under the Islamic f inance
principle of Wakala which is an “agency agreement”
where we act as your agent to achieve an agreed
expected rate of profit for an agreed number of days.
• As your agent we monitor the investment on a daily
basis to make sure that we achieve the expected
profit rate agreed.
• If at any point we are not able to achieve the
expected profit rate, we will terminate the agreement
and return the initial deposit, plus the prof it accrued
up until the date of termination. This process
minimizes the risk to your investment. 41
Different types of Account under Islamic banking
system
• Features and benefits
• Minimum deposit of £50,000
• Available in Pounds Sterling, US Dollars and Euros (the
minimum amount for foreign currency deposits should
be an equivalent value of £250,000, calculated using
the currency exchange rate on the date of the deposit)
• Profits calculated monthly and paid on maturity
• You will not be able to terminate the agreement, add or
withdraw funds before the maturity date
• Your money will be invested in Sharia compliant
investments only and we will not invest in activities that
are c o nsid e re d unlaw ful und e r Shar ia, suc h as
companies that deal in interest, gambling, pornography,
speculation, tobacco and other commodities contrary
to Islamic values 42
Different types of Account under Islamic banking
system
• How it works
• Step 1
• Making an application
• You complete a Wakala Treasury Deposit Account
instruction form and appoint us as your agent to
invest the funds.
• Step 2
• Deposit offer
• Once you have made the application, we will make
you a deposit offer that we can invest the money as
your agent for a fixed fee.
• The deposit offer states the expected (target) rate
of 43
Different types of Account under Islamic banking
system
• return, investment term and the expected (target)
profit on your deposit.
• We will be entitled to any prof it generated from the
investment over the expected (target) prof it rate
offered to you.
• Step 3
• Receipt of funds
• Once you have accepted the offer and we have
received the funds, we will set up the account and
you will receive a confirmation letter.
• Step 4
• Monitoring your funds
• We will work as your agent, closely monitoring your44
Different types of Account under Islamic banking
system
• investment on a daily basis, attempting to achieve
the expected (target) profit rate.
• Step 5
• Unforeseen circumstances
• If for any reason we are not able to achieve the
expected (target) prof it rate, we will give you the
option to close your account.
• If you choose to close your account, we will return
your funds, along with the agreed prof it accrued on
your deposit up until the date of termination.
• Step 6
• Maturity
• On maturity we will pay you back your initial deposit,
45
Different types of Account under Islamic banking
system
• plus the expected (target) prof it amount agreed at
the outset.
• We will credit the funds to your Al Rayan Bank
current or savings account according to your
preference.
• 5. Unrestricted Investment Accounts
• With this type of account, the investment account
holder authorizes the Islamic bank to invest the
account holder’s funds in a manner which the
Islamic bank deems appropriate without laying
down any restrictions as to where, how and for what
purpose the funds should be invested.
• Under this arrangement the Islamic bank can
46
commingle (mix together) the investment account
Different types of Account under Islamic banking
system
• with its own funds or with other funds the Islamic
bank has the right to use.
• The investment account holders and the Islamic
bank generally participate in the returns on the
invested funds.
• Unrestricted participating investment bonds and
any other accounts that are of similar nature are
equivalent to unrestricted investment accounts.
• 6. Restricted Investment Accounts
• With this type of account, the investment account
holder imposes certain restrictions as to where,
how and for what purpose his funds are to be
invested.
47
• Further, the Islamic bank may be restricted from
Different types of Account under Islamic banking
system
• i nv e stm e nt ac c ount f und s f or p urp ose s of
investment. In addition, there may be other
restrictions which investment account holders may
impose.
• For example, investment account holders may
require the Islamic bank not to invest their funds in
instalment sales transactions or without guarantor
or collateral or require that the Islamic bank itself
should carry out the investment itself rather than
through a third party.
• Restricted participating investment bonds and
re s t ri c t e d p a r t i c i p a t i ng i nv e s t m e nt u ni t s
(investment funds) and any other accounts of 48
similar nature are equivalent to the restricted
Different types of Account under Islamic banking
system
• 7. Qard al-hasan
• Qard al-hasan (benevolent lending) is a form of
interest-free loan that is extended by a lender to a
borrower on the basis of benevolence (ihsan). Al-
qard, from a shari’a point of v iew, is a non-
commutative (non-interchangable) contract, as it
involves a facility granted only for the sake of
tabarru’ (donation).
• Therefore, al-qard al-hasan is a gratuitous (free of
charge) loan extended to people in need, for a
specif ied period of time. At the end of that period,
the face value of the loan (asl al-qard) is to be paid
off. 49

• In other words shari’a prohibits the stipulation of

Different types of Account under Islamic banking
system
• excess is expressed in terms of quality or quantity,
or whether it is a tangible item or a benefit.
• However, it is permitted that the repayment of
qardh (loan extinguishing) is made with an excess
(tangible item, benef it, service, etc), provided that
such an excess is neither expressly stipulated nor
implicitly pre-arranged (through collusion or
tawatu’) in the contract of loan.
• The word qard appears in the Qur'an in six verses:
Q2:245, Q5:12, Q57:11, Q57:18, Q64:17, Q73:20. In
every verse it is used as part of the phrase qard al-
hasan, and always in reference to a loan to Allah
rather than other human beings. 50
Different types of Account under Islamic banking
system
• One example is
• If you loan to Allah, a beautiful loan [tuqridu llaha
qard hasan], He will double it to your (credit), and
He will grant you Forgiveness ..(Qur’an 64 (al-
Tagabun):16–17.)
• Qard also appears in numerous hadith. In contrast
to use in the Quran, none of the hadith in the
collections of Bukhari, Muslim, Abu Dawud, Nasa'i,
Ibn Majah, Tirmidhi, Muwatta, Musnad Ahmad, or
Darimi contain the phrase qard al-hasan. All use
qard without any qualifier.

51
 Products and Services Of Islami Bank Bangladesh
Limited (IBB PLC)
• Islami Bank Bangladesh PLC (IBBPLC) is the
largest commercial bank of Bangladesh. It is the
f irst Shariah-based Islamic bank in the South-East
Asia established in March 1983. The Bank is a joint
venture Public Limited Company with majority
shareholding by foreign institutions and enlisted
with Dhaka & Chattogram stock exchanges. With
395 branch, 249 sub-branch & 2,771 Agent Banking
Outlets, the Bank possesses the largest branch
network am ong the p riv ate sec tor b anks in
B a n g l a d e s h . I t r e n d e r s g e n e ra l b a n k i n g ,
commercial investment and foreign exchange
services with substantial CSR activities. Besides,
the Bank is a global pioneer in and largest operator 52
 Products and Services Of Islami Bank Bangladesh
Limited (IBB PLC)
• T he re are thre e p rod uc ts i n I sl am i Bank
Bangladesh Limited. They are
• 1. Deposit Product
• 2. Investment Product
• 3. Rural development Scheme Deposit Product
• Islami Bank Banladesh Limited mobilize its
deposit in the following two accounts
• Al-Wadeah Accounts
• Mudaraba Accounts
• Al-Wadeah Accounts: Islami Bank Bangladesh
Limited operates Al-wadeah Current Account on
the principles of Al-wadeah. The Bank commits 53to
refund
 Products and Services Of Islami Bank Bangladesh
Limited (IBB PLC)
• m oney deposited in these Ac c ounts on the
demand of customers. On the other hand the Bank
takes permission from customers that the Bank
may utilize their money. Customers may operate
these Accounts as their desires. No prof it is
disbursed in these Accounts and depositors do not
bear any loss
• Mudaraba Accounts: In the perspective of these
Accounts the Bank is 'Mudarib' and customers are
'Shahib Al-Mal'. On behalf of depositors, the Bank
invests their deposited money and distributes
minimum 65% of investment-income earned
through deployment of Mudaraba funds among
54
Mudaraba depositors after the closing of the year.
Products and Services Of Islami Bank Bangladesh Limited PLC
• Al-Wadeah Current Account (AWCA)
• Mudaraba Savings Account (MSA)
• Mudaraba Term Deposit Account (MTDR)
• Mudaraba Special Notice Account (MSNA)
• Mudaraba Hajj Savings Account (MHSA)
• Mudaraba Special Savings (Pension) Account (MSSA)
• Mudaraba Savings Bond (MSB)
• Mudaraba Monthly Profit Deposit Account (MMPDA)
• Mudaraba Muhor Savings Account (MMSA)
• Mudaraba Waqf Cash Deposit Account (MWCDA)
• Mudaraba NRB Savings Bond (MNSB) Account
• Mudaraba Foreign Currency Deposit Account (MFCD)
• Students Mudaraba Savings Account (SMSA)
• Mudaraba Farmers Savings Account (MFSA) 55
Products and Services Of Islami Bank Bangladesh Limited PLC
• Islami Bank Bangladesh Limited has launched
three deposit products recently. (14.09.2022)
• The products are:
• 1. Mudaraba Education Savings Scheme,
• 2. Mudaraba Expatriate Housing Deposit Scheme
and
• 3. Mudaraba Senior Citizen Monthly Prof it Deposit
Scheme
• Two investment products named
• 1. Swapnokutir Semi pucca Housing &
• 2. Swapno bunon Education Investment Scheme.

56
 Products of IBBL
• Al-wadeah Current Account
• Main Features : Islami Bank Bangladesh Limited
operates Al-wadeah Current Account on the
principles of Al-wadeah. The Bank commits to
refund money deposited in these Accounts on the
demand of customers. On the other hand the Bank
takes permission from customers that the Bank
may utilize their money. Customers may operate
these Accounts as their desires. No prof it is
disbursed in these Accounts and depositors do not
bear any loss.
• Required Documents
• Complete account opening form
• Minimum deposit Tk.1000/- 57
 Products of IBBL
• 02 Copies passport size photographs of every
operators duly attested by introducer
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• 1 copy photograph of nominee duly attested by the
accountholder
• Signature of Introducer

58
 Products of IBBL
• Mudaraba savings account
• Main Features
• Mudaraba savings account is opened under the
Mudaraba principal of Islami Shariah. Under the
above principal the clients is the Shaheb-Al Mal
and the Bank is Mudarib. Mudaraba Savings
accounts are mainly meant for Non-Trading
customers who have some potential saving with
small no. of transactions taking place. More than
one person can open and operate a Mudaraba
savings account. A guardian on behalf of a minor
can open a Mudaraba Savings A/C. In which case a
declaration stating the date of birth of the minor
should be obtained from the guardian. 59
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Initial deposit Tk.500/-
• Introducer signature

60
 Products of IBBL
• Mudaraba Term Deposit Receipt (MTDR)
• Main Features
• Mudaraba Term Deposit Receipt (MTDR) is a prof it
bearing account which offers returns by depositing
money for f ixed period of time based on Mudaraba
concept. These deposits are repayable subject to a
period of notice and hence known as time deposits
or time liabilities meaning thereby that these are
withdrawable subject to a period of notice and not
on demand. Tk.1000/- and multiple of Tk.100/- for
the period of 3 months, 6 months, 12 months, 24
months and 36 months can be deposited.

61
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.1000/-
• Introducer signature

62
 Products of IBBL
• Mudaraba Special Notice Deposit (MSND)
• Main Features
• Mudaraba Special Notice Deposit (MSND) is a
prof it bearing Mudaraba deposit suitable for you if
you are involved in business or your transactions
are frequent but does follow a pattern. It enables
you to operate a kind of Current Account which
incurs profit.
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the63

accountholder
 Products of IBBL
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.25000/-
• Introducer signature

• Mudaraba Hajj Savings Account (MHSA)

• Main Features
• Any Muslim intending to perform Hajj by bulding-up
deposit in Hajj Sav ing Account required for
meeting Hajj expenses will select one from the 25
alternative choices based on duration of period
from 1 year to 25 years for building up savings by
monthly installments 64
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Introducer signature

65
 Products of IBBL
• Mudaraba Special Savings (Pension)
• Main Features
• Mudaraba Special Savings (Pension) Account of 5-
year or 10-year term may be opened for monthly
deposits of Tk. 100.00, Tk. 200.00, Tk. 300.00, Tk.
400.00, Tk. 500.00, Tk. 600.00, Tk. 700.00, Tk.
800.00, Tk. 900.00, Tk. 1000.00 and Multiple of
thousand upto Tk. 20,000.00 only. After maturity of
the account, the account holder will be paid his
deposited amount with profit earned at a time or on
installment basis. The parents or legal guardians
shall be allowed to open this account jointly with a
minor.
66
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.100/-
• Introducer signature

67
 Products of IBBL
• Mudaraba Savings Bond (MSB)
• Main Features
• Persons aged 18 years and above shall be eligible
to purchase Mudaraba Savings Bond in single
name or in joint names, Educational Instituions,
Clubs, Associations and other non-trading and non-
prof it socio-economic institutions shall also be
eligible to purchase Bonds in the name of the
institutions. Guardians shall be allowed to purchase
Bonds jointly with a minor mentioning the age of
the m inor. Mudaraba Sav ings Bond shall be
available Tk.1000, Tk.5000, Tk.25000, Tk.50000,
1,00,000, Tk.5,00,000 and Tk.10,00,000
denominations 68
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.1000/-

69
 Products of IBBL
• Mudaraba Monthly Profit Deposit Account (MMPDA)
• Main Features
• Any indiv idual m ay open this Account by
depositing money a minimum amount of Taka
100,000/- and multiples thereof at a time for f ive
years only. Monthly provisional prof it shall be given
to the Account just after completion of minimum
30 days from the date of opening of the Account.
The prof it amount shall be adjusted on completion
of each accounting year after declaration of f inal
rate of profit

70
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.100000/-
• Introducer signature

71
 Products of IBBL
• Mudaraba Muhor Savings Account (MMSA)
• Main Features
• As per Islamic Shariah, it is Fard for a husband to
pay Muhorana to his wife. The Bank introduces this
Account for creation of opportunities to establish
this Fard. Any conscious husband may open
Account in the name of his wife for monthly
installment of Tk. 500/-, Tk. 1,000/-, Tk. 2000/-, Tk.
3,000/-, Tk. 4,000/- and Tk. 5,000/- only in 5 years
and 10 years terms
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of husband 72
and wife each
 Products of IBBL
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.500/-
• Introducer signature
• Mudaraba Waqf Cash Deposit Account (MWCDA)
• Main Features
• To implement your noble desire, this Account may
create cash waqf at a time or may start with a
m inim um deposit of Tk. 10, 000/ - ( Taka ten
thousand only) and the subsequent deposit shall be
made by installments(s) in 73
 Products of IBBL
• thousand taka or in multiple of thousand taka.
Prof it of this account is utilized for social and
human welfare as per instruction of the account
holders
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman certificate
• Minimum deposit Tk.10000/-
• Introducer signature
74
 Products of IBBL
• Mudaraba NRB Savings Bond (MNSB) Account
• Main Features
• The Non-Resident Bangladeshi (NRB) aged 18
years and above who have been serving abroad
and his family members will be eligible to purchase
Mudaraba NRB Savings Bond maintaining the
denomination of Tk.25,000, Tk.50,000, Tk.1,00,000,
Tk.2,00,000, Tk.5,00,000 and Tk.10,00,000 in
Bangladesh Currency for a period of 5 or 10 years
term. An expatriate may purchase this bond in the
name of his/her minor children as per usual terms
and c ond i ti ons ap p l i c ab l e to other d ep osi t
products
75
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman or Employer certificate
• Minimum deposit Tk.25000/-
• Introducer signature

76
 Products of IBBL
• Mudaraba Foreign Currency Deposit Account
(MFCD)
• Main Features
• This Account may be opened by depositing
minimum US $1,000/- at designated Branches of
the Bank. Bangladeshi nationals residing, working
and earning abroad, foreign national residing in
Bangladesh and also foreign f ir ms registered
abroad and operating in Bangladesh foreign
missions and their expatriate employees are
eligible to open this Account. The Account-holder
will get profit as per rules and regulation.
77
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by
the accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman or employer certificate
• Minimum deposit US $1,000/-
• Introducer signature

78
 Products of IBBL
• Students Mudaraba Savings Account (SMSA)
• Main Features
• With a view to grow up savings habit among the
minor students, to gather knowledge about banking
services and modern technology the Student
Mudaraba Savings Account has been introduced.
Special privileges have been offered in this
account. The privilege to the minor students and
encourage them to make savings in Banks that will
be helpful for them to make a big savings little by
little for completion of higher education. Any
guardian can open this account in the name of
students below 18 years of any educational
institutions by showing Identity Card with Tk.100/-
79

as initial deposit only

 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of operator
and student
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman or School Authority
certificate
• Minimum deposit Tk.100/-
• Introducer signature

80
 Products of IBBL
• Mudaraba Farmers Savings Account (MFSA)
• Main Features
• With a view to grow up savings habit among the
farmers to involve them in banking transaction
considering their contribution to the f in ancial
activities, to bring them under the banking arena
and to increase Financial Inclusion of the country to
encourage them to make savings in Banks that will
be helpful for them to make a big savings little by
little to enhance their f inancial strength at the time
of their crucial need. This account can be opened
by depositing Tk.10/- only

81
 Products of IBBL
• Required Documents
• Complete account opening form
• 02 copies passport size photographs of account
holder duly attested by introducer
• 1 copy photograph of nominee duly attested by the
accountholder
• I d e n t i f ic a t i o n p r o o f l i k e N a t i o n a l I D
Card/Passport/Chairman or Farmers ID Card
• Minimum deposit Tk.10/-
• Introducer signature

82
 Products and Services Of Islami Bank Bangladesh
Limited (IBB PLC)
• Investment
• The special feature of the Investment Policy of the
Bank is to invest on the basis of prof it-loss sharing
syste m i n ac c o rd anc e wi th the te ne ts and
principles of Islamic Shari'ah. Earning of prof it is
not the only motive and objective of the Bank's
Investment Policy rather emphasis is given in
attaining social goal and objective in creating
employment opportunities.
• Following modes are used for investment:
• BAI-MODES
• Bai-Murabaha
• Bai-Istijrar 83
Products and Services Of Islami Bank Bangladesh Limited (IBB
PLC)
• Bai-Muajjal
• Bai Salam
• Bai-As-Sarf
• SHARE-MODES
• Mudaraba
• Musharaka
• IJARA-MODES
• Hire Purchase Under Shirkatul Melk
• Under consumer f inancing, the Bank f inances to
the individuals for meeting their personal, family
and household needs. The Bank has taken up
various welfare oriented investment Schemes .
84
Products and Services Of Islami Bank Bangladesh Limited (IBB
PLC)
• Investment Scheme
• House Hold Investment Scheme
• Investment Scheme for Doctors (ISD)
• Transport Investment Scheme (TIS)
• Car Investment Scheme (CIS)
• Small Business Investment Scheme (SBIS)
• Micro Industries Investment Scheme (MIIS)
• Agricultural Implement Investment Scheme (AIIS)
• Real Estate Investment Program (REIP)
• Real Estate Investment (Commercial & Working Capital)
• Agricultural Investment of IBBL
• N R B ( N o n R e si d e nt B a ngl a d e sh i ) E nt re pre ne u r s
Investment Scheme(NEIS)
• Women Entrepreneurs Investment Scheme (WEIS) 85
Products and Services Of Islami Bank Bangladesh Limited (IBB
PLC)
• Services of Islami Bank
• Islami bank provide several services. The services
are given below
• NRB Services
• Remitance Card
• Investment Scheme for Foreign Expatriate
• Mudaraba NRB Saving Bond
• SME
• Islami Bank Bangladesh Limited has been working
since 1983 in the view to establish a welfare
oriented Islami Banking system and also to ensure
equity and justice in the f ie ld of all economic
activities, achieve balanced growth and equitable
86

development through
Products and Services Of Islami Bank Bangladesh Limited (IBB
PLC)
• diversif ied investment operations particularly in
the priority sectors and less developed areas of
the country and to encourage socio-economic
uplift and f inancial services to the low income
community, particularly in the rural areas. Since
inception of the Bank, it has been giving priority
in financing SMEs.
• Locker Service
• Our safe deposit locker service offered from
select branches gives you a completely secured
facility for safekeeping of precious items,
confidential documents and other valuables.
87
Products and Services Of Islami Bank Bangladesh Limited (IBB
PLC)
• Offshore Banking Units (OBU)
• Islami Bank Bangladesh Limited commenced
operation of its Off-Shore Banking Units (OBU)
located at Head Of fice Complex Branch- Dhaka,
Uttara Branch-Dhaka and Agrabad Branch,
Chittago ng under the license issued by
Bangladesh Bank.

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