Islamic Banking Product

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LAW 240 ISLAMIC BANKING PRODUCT

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ISLAMIC BANKING PRODUCT

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ISLAMIC BANKING PRODUCT

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AL-WADIAH (CURRENT A/C)
• Based on the Islamic principle of Al-Wadi'ah Yad-Dhamanah (Guaranteed Safe Custody) • Can withdraw all or part of money whenever want. • Free from Riba (Usury) and is the clear and pure way to bank. • Can be opened by an individual aged 18 years and above with the capacity to contract, or a company, organisation or society conducting activities permissible by Syariah. • An account can be closed at the request of the customer by operation of law or at the discretion of the Bank. • Both the customer and the Bank can terminate the 05/29/13 Al-Wadi'ah contract PRODUCT time. 4 ISLAMIC BANKING at any

AL-WADIAH (SAVINGS A/C)
• A contract between the depositor and the bank • The purpose of which is to protect savings from loss, theft, destruction, etc. • Guarantee the safekeeping of deposits and will repay the whole deposit or any part of the outstanding balance upon request. • The bank at its absolute discretion, can give part of the profits obtained in the form of reward (Hibah) to the depositor. • The individual must also be of sound mind and age 15 and above. A minor's account can be opened in the name of the parent or guardian. • An account can be closed at the request of the customer, by operation of law or at the discretion of the bank. • Both the customer and the bank can terminate the Al-Wadi'ah contract at any time. 05/29/13 ISLAMIC BANKING PRODUCT 5

AL-MUDHARABAH (GENERAL INVESTMENT A/C)
• A contract made between a depositor "the provider of capital" and the bank "the entrepreneur". • The amount deposited for a stipulated period by the depositor will be used by the bank for investment purposes according to the AlMudharabah principle. • All profits earned will be shared between the depositor and the bank. • This account is eligible to all individuals, Government Departments, partnerships, firms, corporations, societies, associations and other business enterprises. • For individuals below 15 years of age, the 05/29/13 6 ISLAMIC BANKING PRODUCT

AL-MUDHARABAH (SPECIAL INVESTMENT A/C)

• It is a short-term placement with the bank based on the Syariah Principle • Suitable for investors who are seeking the opportunity and flexibility to invest their cash surplus. • The ratio of profit distribution and mode of investment are negotiable;

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APPLICATION OF FUND

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ARBUN
• Down payment; a non-refundable deposit paid by a buyer • Retaining a right to confirm or cancel the sale.

GHARAR
• It means any element of absolute or excessive uncertainty in any business or a contract about the subject of contract or its price, or mere speculative risk. • It leads to undue loss to a party and 05/29/13 9 ISLAMIC BANKING PRODUCT

Bai‘ Muajjal
• Means a credit sale. • Seller earns a profit margin on his purchase price • Allows buyer to pay the price of the commodity in a lump sum or in installment. • He has to expressly mention cost of the commodity and the margin of profit is mutually agreed. • The price fixed can be the same as the spot price or higher or lower than the ISLAMIC BANKING PRODUCT spot price. 05/29/13 10

AL-Mudharabah (Trustee Profit Sharing)

• Derived from darb • A form of partnership where one party provides the funds while the other provides expertise and management. • Lately, it is referred to as the Mudarib. • Any profits accrued are shared between the two parties on a preagreed basis, while loss is borne by the provider(s) of the capital. 05/29/13 ISLAMIC BANKING PRODUCT 11

Al - Musharakah (Joint Venture Profit Sharing)

• A relationship between two parties or more, of whom contribute capital to a business, and divide the net profit and loss pro rata. • Often used in investment projects, letters of credit,...
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