politics, business, capacity building etc.

“Non-interest Banking is one in which a customer, whether an individual or business, is not just a customer, but a partner with the bank.”

This means we share the risk as well as the profits of such partnership and ownership. This unique arrangement is structured under the principles of Shari’ah (Islamic Law) which always ensures complete transparency.

Non-interest Banking is unique in the way that helps customers build tangible and appreciating assets for themselves. This not only leads to prosperity founded on a solid economic base but also encourages the spirit of enterpreneurship amongst its customers.

What makes Islamic banks different ?
They are interest-free
They share risk as well as your profits via equity participation.
They embrace environmentally and socially conscious practices.
They don’t finance harmful items, e.g., guns, tobacco, alcohol, gambling, etc.
They also do not finance or partner with businesses that are uncertain and involve speculation.

Non-interest Banking products
DEPOSIT (MONEY SAFEGUARDING)

1- CURRENT ACCOUNT: The current accounts are based on the principle of “Qard” which translates to a benevolent loan.

Here the bank keeps the customer’s money and returns the whole sum on demand. No profit is shared between the bank and the account holder . It is deemed a benevolent loan because the customer gives consent to the bank to deal with any part of the balances in manner it deems fit .

2- SAVINGS ACCOUNT: The saving accounts are based on the principle of “Mudarabah” which can be simplified as profit sharing. Mudarabah is a partnership porfit between the bank and a customer for a pre-agreed period.
Customers can deposit funds with the bank, which will then be invested in a functioning business that compiles with the principles of sharia. Customers can deposit or withdrawoney at any time and earn profits on their savings.

FINANCING
Non-interest banks offer financing facilities to customers to fulfill their business and personal requirements based on the following contracts depending on the requirements of the client.

1. Leasing Finance (ijara wa iqtina) : This is a contract wherein the bank leases property to customer in return for a rental payment over a specified period. The bank promises to transfer the title of the property to the customer at the end of the period, provided all payments have been made per the documentation.

What it finances ?
Vehicle financing
Mortgage financing
Consumer financing

2. Cost-Plus finance (Murabaha): This is a finance structure that works as a sales contract. It involves purchasing items based on the customer’s demands.
The bank makes the purchase from the customer’s seller of choice, includes a pre-agreed profit margin, and enters into a sales contract with the customer on a Murabaha basis. The customer pays the bank according to the defined installment of settlement terms.

What it finances ?
Import finance
Export pre-shipmemt finance
Inventory finance
Agriculture finance
Working capital finance

3. Forward sales finance (Salaam): This contract is a sale whereby the seller undertakes to supply a certain commodity to the buyer at a future date in exchange for a financial consideration paid at the spot. In other words, the payment for the commodity is made immediately whereas it’s delivery takes place in the future. In this case, the bank pays the agreed amount of the financing to the client in advance, and the goods are delivered to the bank at a specified future date and place.

What’s it finances ?
• Agriculture finance

4. Project finance (Istisna) : This is generally a long-term sales contract between a customer and the bank, whereby the ethical bank agrees to construct and deliver an asset at a pre-determined future time, at an agreed price.

The bank enters into a contract with a contractor/developer/builder to construct the asset based in the customer specification. The bank takes care of paying the contracted developer or builder in full or at specific stages of project completion. The customer then pays the bank either in installments, at delivery, or after project completion.

What it finances ?
Construction financing
Manufacturing financing

Partnership (Musharakah) :
This is a partnership between customer and the bank, where the ethical bank participates in financing new of existing projects, sharing the capital, risks and profit. The bank may alternatively contribute to the ownership of specified assess on permanent or a non-parrmanents basis provided that the profit is shared per an agreement between the bank and the customer.

INVESTMENTS
Fixed Deposit : Fixed deposits are received by the bank based on a partnership principle called profit sharing.

The investment can be restricted to financing a specific sector or business or on an unrestricted basis, i.e. at the discretion of the bank. The bank acts an entrepreneurial agent of the customer and is authorised to poll the deposits of other customers to invest in specific Non-interest Banking complaint undertakings or investments on behalf of the customer.

The return on the investment is high yielding and competitive.

Wakala investments : Wakala investment is a fixed tenured investment account that offers customers high returns on their investment. It is based on the principle of the agency called wakala where the customer (principal) appoints the bank to act as its agent. The funds are invested into the specific project under terms and conditions acceptable to the principal. The terms are the fees, commission, or profit-sharing with agent i.e the bank (agent). The bank lends it’s expertise and manages the investment/a on behalf of the principal for a particular duration, to generate an agreed profit return.