Put your idle cash to work for you. If the Bank keeps the Investment Assets as “low risk”, there should not be any concerns to the average customers. “Unrestricted Investment Account” means a type of Investment Account where the investment account holder provides the Bank with the mandate to make the ultimate investment decision without specifying any particular restrictions or conditions. Ideally, readers should continue to enhance their knowledge as the more they learn about Islamic Banking, the more they realise the need to support the industry. Any contracts that carries an element of risks to the customer’s capital will be classified as Investments. Both for worse case and best case scenario of the investment. As a start, the Mudharaba Investment Account, migrated from a Mudharaba Current Account or Savings Account, will now carry their own risk profile, depending on the portfolio of the Investment Assets. Bank distributed the profit to the customer, based on the individual Profit Sharing Ratio. Open an account for general investment through online trade. 70% in 2013, to 7% in 2015/6. Premier Mudharabah Account-i. There is no Shariah blockage to stop a Mudharabah structure to be guaranteed (for example by a third party), provided the structure can be introduced which meets all the shariah criteria. The clause where the capital investment of the Mudharaba is open to potential losses has always been there. They will see the historical returns on the investments. If the Asset is an external investment, there will be a “market value” to be calculated (Mark-To-Market) and any early redemption may result in loss of capital/equity. It provides greater transparency to customers, and enhance their involvement in the product by understanding the risks undertaken. But all this while, the Mudharaba structure is already being managed as an “Investment” via the General Investment pool. Technically, there is no such thing as Displaced Commercial Risk, as it is replaced by Market Risk, Interest Rate Risk and Valuation Risk. ( Log Out /  The investment is either divested based on prevailing market value, or re-invested into a new tenure with new investment terms or parameters. The. Under a Mudharaba Deposits, the following happens: But what happens if the Mudharaba must now behave as an Investment? Investment Accounts may change the way you bank at the moment, but it really is a similar proposition to the Mudharaba Deposit account with eventually greater transparency and disclosure. Customer will also be informed of where their Investments are being invested into and the risks and potential future rewards of the investment. Change ), You are commenting using your Twitter account. I think a big portion of this decrease is due to automatic conversion into wadiah or commodity murabaha accounts which still are under the protection of the PIDM. With all this in mind, would you argue that Islamic banks may lose part of their deposits (that would be classified as investments now) to funds or other asset managing firms, or will banks come up with attractive enough offers fast enough to prevent any outflow? Thanks Agapito. Banks still have some minor degree to mitigate DCR, but it is not like before. There is always a “want” to pay a certain return to meet the expectancy of the fund provider or partner to ensure the funds or arrangement continues and not terminated or cancelled. It is without doubt that the huge drop of Mudharabah deposits resulted from the forced conversion into Wadiah. The Mudarabah contract is a partnership contract whereby the depositor or … In relation to DCR, what are the alternative (in a point of view as a banker) to mitigate DCR since smoothing techniques are technically probihited by Invesment Account Policy endorsed by BNM? 295576-U) (‘the Bank’) including General Investment Account-i, Afdhal Investment Account-i, Am50Plus Investment Account-i, AmQuantum Investment Account-i and ValuePlus Investment Account-i. Low Risk Investment Account – suitable for short term arrangement, with low returns instruments, Medium Risk Investment Account – suitable for a diversified portfolio, High Risk Investment Account – suitable for a targeted investment expecting high returns, and volatility. If you notice, in the terms and conditions prior to 2013, the language also talks about valuation risks and equity risks, and remained consistent after 2013. Estimates is correct!!! of risk mitigation familiar by the conventional bank the investment... 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