Initial Draft for Al Wadiah Deposits

Submission Type: Internal

Submitted to: Tanveer Munshi

Submitted by: Mustafa Dalal

Version Date Document Author Reviewer Remarks

1.0 13/02/2015 Deposits Mustafa Dalal Tanveer 1st cut draft
Munshi

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 Contents
Deposits (Riba Free) ...................................................................................................................................... 3
Changes to be made for Current Deposits product in CBS ........................................................................... 4
Generic Masters ............................................................................................................................................ 4
Generic Screens ............................................................................................................................................ 4
Reports .......................................................................................................................................................... 5

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Deposits (Riba Free)

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these deposits can be withdrawn at any time, the depositors have no right to any
return/profit on such deposits. However, depositors, at the bank's discretion, may
be rewarded with a Hibah provided such gifts do not become a custom or a
permanent practice. In Islamic banks, Current Account deposits are based on the
principle of Amanah / Wadiah or that of Qard. In the first type, interest-free
deposits are held by the banks either in trust (Amanah), or in safe-keeping
(Wadiah). Under Amanah arrangement, the Islamic bank treats the funds as a trust
and cannot use these funds for its 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 depositors have no right to any return/profit on such deposits. However,
depositors, at the bank's discretion, may be rewarded with a Hibah provided such
gifts do not become a custom or a permanent practice. In the second type, the
client gives the bank authority to use current accounts funds to invest in its
operations, in that case, the deposit amount is considered as a non-interest loan by
the depositor to the bank. The bank has the obligation of to return the credit
balance upon demand clients who have no right to receive any profit on their
balances. The liability to return a Qard deposit is not affected by the bank’s
solvency or otherwise.

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Changes to be made for Current Deposits product in CBS

1. The lookup value for Current Deposit in 1053 needs to be changed to Al Wadiah Deposits
2. Record in "Checking account parameter maintenance" need not be created
3. Record in "Slab Rate Maintenance" need not be created.
4. TOD for negative balance in the account should be marked as "Critical Error" hence it will not allow
the transaction to happen.

Generic Masters

 Product Master
 Customer Master
 Account Master
 Country Master.
 Region Master.
 City Master
 Area Master

Generic Screens

Sr. No Head Description

1. Dashboard (Islamic Retail Dash Using the dashboard, user will be able to handle all the
board) required Islamic products for new customer as well as
existing customer. Will be able to handle the required
tasks / Activities to be conducted in the existing
contracts
2. New Contract Using the New Contract button, user will be able to
create a new contract for the selected customer and
selected product under the selected currency.

2. Contract View User will be able to view / edit the contracts.

3. Transaction View of each step User will be able to view / edit the various stages of
completion of the contract.

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Reports
Following Report need to be incorporated

1. Account Statement

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