o 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. [5]
Savings deposit accounts operate in a different way. The depositors allow the banks to use their money invested in profitable business ventures which are legal and Shari'ah compliant. Generally, deposits in savings accounts are accepted by Islamic banks on the basis of Mudarabah where the depositor is rabb-ul-mal (investor) and the bank is the Mudarib (fund manager). The profit will be shared as per a pre-determined ratio upon, while loss will be borne by the rabb-ul-mal. Profit 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 paced in a joint investment pool with other deposits mobilised by the Islamic banks.deposits are accepted for a fixed period of time or term and are governed by the Mudarabah contract with the bank. When deposits are for an agreed fixed 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 amo ng the depositors represented by the pool. 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 profit sharing weight ages 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 time of setting up an investment pool, the relationship will be a combination of Musharakah and Mudarabah, and the bank would be entitled to a proportionate profit on its own investment in relation to the total Mudarabah investment pool. Islamic banks can also open may announce Murabaha and leasing funds in which the risk-averse investors may purchase units and be treated as rabb-ul-mal and get the quasi fixed-return from profits or rentals earned by the respective funds from the trading and leasing activities. [6]
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