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Interbank Investment Account (Mudarabah) (IIA Mudarabah)


Definition Interbank Mudarabah : Interbank Mudarabah is a wholesale money market transaction designed as liquidity management instruments in the Islamic Money Market. Based on a profit sharing concept, its features are all but not limited to the following:

  • Return is only determined on maturity date
  • Fixed maturity period
  • Known risk profile
  • Principal is not guaranteed


Investment Account :

An account under which money is paid and accepted for the purposes of investment, including for the provision of finance, in accordance with Shariah on terms that there is no express or implied obligation to repay the money in full and

a) either only the profits, or both the profits of losses, thereon shall be shared between the person paying the money and the person accepting the money; or

b) with or without any return.

 

Unrestricted Investment Account :

A type of investment account where the investor authorize the Bank to invest their funds in Shariah compliant assets without specifying any restrictions or conditions on the management of the funds.

Applicable Shariah concept Mudarabah (Profit sharing):
A form of partnership between one who contributes capital (rabb al-mal/capital provider) and the other who contributes efforts in the form of managerial skills (mudarib/manager). Profit from the outcome of the partnership is shared between the capital provider and manager according to mutually agreed profit sharing ratio whilst losses are borne solely by the capital provider, provided such loss is not due to the manager’s negligence or violation of specified conditions.
Features Interbank Mudarabah is a joint venture between two interbank counterparties where the surplus bank invests or place funds with the deficit bank. Both parties will then negotiate and agree on the amount, tenor of investment and profit sharing ratio. Any loss must be borne by the investor. The accepting bank also will not guarantee the investor’s principal amount on the investment activities. Profit is paid on the maturity date based on the receiving bank prevailing gross rates and the sharing ratio of the investing bank.
Types of Interbank Mudarabah There are four types of Inter-Bank Mudharabah:

  • Mudarabah Interbank /Placement (MIP)

MIP refers to the Bank investment on the basis of Mudarabah to another participating bank.

 

  • Mudarabah Interbank Acceptance (MIA)

MIA refers to the Bank accepting investment on the basis of Mudarabah from another participating bank.

 

  • Foreign Mudarabah Placement (FMIP)

FMIP refers to the Bank investment in foreign currency on the basis of Mudarabah from another participating bank.

 

  • Foreign Mudarabah Acceptance (FMIA)

FMIA refers to the Bank accepting foreign currency investment on the basis of Mudarabah from another participating bank.

Profit Sharing Ratio Negotiable
Minimum Amount Negotiable
Minimum Tenure 1 day
Qualified Investor(Self Suitability Assessment)
  1. All financial institutions that are accorded with ‘Interbank’ status by BNM and are allowed to trade via local secondary market.
  2. All foreign financial institutions that are permitted.
Investment Confirmation Your receipt of an investment confirmation on the Interbank Mudarabah (either from the Bank or from the Bank’s broker) will constitute a binding contract.Profits generated from the Interbank Mudarabah are shared in accordance with the agreed profit-sharing ratio. Losses (if any) are to be borne by the investor and the Bank does not bear any portion thereof unless the losses are due to Bank misconduct, negligence or breach of contract.Please inform the Bank immediately if there is any discrepancy contained in the investment confirmation. If the Bank does not receive your confirmation within seven (7) days of our confirmation date, the Bank shall regard the confirmed transaction as correct and in order.

Important Notice: The contents of the above table, namely the details of Profit Sharing Ratio, Minimum Amount and Minimum Tenure are subject to change at the sole discretion of the Bank and customers should obtain confirmation from the Treasury Sales Team prior to making any decisions based on the above.

By making a request for the IIA Mudarabah, the customer understands the loss bearing or loss transfer feature of the Mudarabah contract and acknowledge that the Bank has legal recourse against the investor to enforce its rights.

For further details, kindly contact our Treasury, Asset Liability Management Desk at 03-2090 1610 / 1611.

Note : Information contained herein is accurate as of the time of publishing and subject to change in accordance with applicable rules, regulations or guidelines issued by Bank Negara Malaysia from time to time. All products offered by Bank Islam are subject to the Islamic Financial Services Act 2013 and any applicable laws derived therefrom.

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