SYARIAH BANKING CONCEPT
Al-Wadiah (savings with trust/guarantee)
Al-Wadiah refers to agreement where customers deposit money in the Bank, and the Bank becomes wholly responsible and liable for its safekeeping.
Al-Mudharabah refers to an agreement where customers deposit capital in the Bank, and the Bank becomes wholly responsible and liable in the management and investment the deposits in halal business ventures. Profits gained will be divided and distributed accordingly, based on margins agreed upon earlier.
Al-Musyarakah (joint venture)
Al-Musyarakah refers to a partnership or joint venture for a specific business purposes with a profit motive, whereby the distribution of profits/losses will be apportioned according to the capital contributed.
Qardhul Hassan (benevolent loan)
Qardhul Hassan refers to an interest-free loan. The borrower is only required to repay the principal amount borrowed, but he may pay an additional amount at his absolute discretion, as a token of appreciation.
Al-Ijarah Thumma Al-Bai' (hire and purchase)
Refers to two contracts undertaken separately and subsequent as follows:
(i) Al-Ijarah contract (hire); and
(ii)Al-Bai' contract (purchase).
Under the first contract, the customer hire the goods from the Bank at an agreed rental amount over a specified period. Upon expiry of the hiring period, the customer enters into a second contract to purchase the goods from the Bank at an agreed price.