Islami Banking branches receive deposits under two principles:
i) Al-Wadeeah principle.
ii) Mudaraba principle.
Fund which is deposited with Bank by the depositors with clear permission to utilize /invest the same is called Al-Wadeeah. Islami Banking branches receive deposits in Current Accounts on the basis of this Al-Wadeeah Principle. Islami Banking branches obtain permission from the Al- Wadeeah depositors to utilise the Funds at its own responsibility and the depositors would not share any profit or loss earned/incurred out of using of this funds by the bank. The bank have to pay back the deposits received on the principle of Al-Wadeeah on demand of the holders. The depositors have to pay govt. taxes and other charges, if any.
Mudaraba is a partnership of labour and capital, where one partner provides full capital and the other one manages the business. The capital provider is called Sahib-Al-Maal and the user of the capital is called Mudarib. As per Shariah principles, the Mudarib will conduct the business independently following Shariah principles. The Sahib-Al-Maal may provide advices, if he deems fit but he can not impose any decision over the Mudarib. Profit, if any, is divisible between the Sahib-Al-Maal and the Mudarib at a predetermined ratio, while loss, if any, is borne by the Sahib-Al-Maal. Mudarib can not avail of any salary or remuneration against his labour as a manager or conductor of the enterprise/business. The deposits, received by Islami Banking branches under this principle are called Mudaraba Deposits. Here, the depositors are called Sahib-Al-Maal and the bank is called Mudarib. The Mudaraba deposits include:
i) Mudaraba Savings Deposits (MSD)
ii) Mudaraba Short Notice Deposits (MSND)
iii) Mudaraba Term Deposits (MTD).