This week’s Islamic product focuses its attention on Halah, Riba free Dollar Mudarabah Certificates offered by Meezan Bank. A Meezan Bank Dollar Mudarabah Certificate is basically a deposit made to the Bank in US Dollars through which the depositors can earn profits after every six months or in aggregate at the date of maturity of the certificate. The minimum deposit duration of each certificate is three months while its maximum limit is three years.
According to the Bank, the Dollar Mudarabah certificates function on the principle of Mudarabah such that each customer is termed as the Rab-ul-Maal (investor) while the Bank, the Mudarib (manager) of the funds entrusted by the customers. It is a very simple procedure that pools funds from customers in this way and gives them out to customers on the basis of any Islamic Principle of finance, be it Ijarah, Istisnah, Murabaha or diminishing Musharakah. There is no restriction on the Islamic concept of financing through which funds collected via the Dollar Mudarabah Certificates are given out. The Bank further advises that the Dollar Mudarabah Certificates offered by it are an ideal investment for individuals, sole proprietorships, limited companies as well as partnerships.
There are some further conditions to the Dollar Mudarabah certificates however which need to be given due consideration. First, the minimum investment required by a customer to be eligible for the award of a Dollar Mudarabah Certificate by Meezan Bank is ten thousand [10,000] US Dollars. Second, premature withdrawal from the certificates is an option that is available with Meezan Bank but via a schedule duly approved by the Management. A copy of the schedule can be requested from the Bank.
Third, the Bank calculates the profit stemming out from the funds pooled from deposits of Dollar Mudarabah Certificates, funds which are given out as loans in various modes of Islamic Banking. Trustworthiness is a major factor here which starts with the customers trusting the Bank with their deposits and continues throughout the investment process with the customers trusting the bank with the calculation and posting of the final figure for profit from the pool.
After the profit figure has been calculated, the bank distributes the Income between itself (the Mudarib) and the customers (Rab-ul-Maal) on the basis of a ratio that is decided, announced and agreed at the start of the agreement between the bank and the interested customers. Since the profit is extracted from a pool, it has to be shared amongst the various customers (Rub-ul-Maals), the different donors to the pool but on the basis of some benchmark, some ratio. This is neatly done by means of distributing the returns from the investment on the basis of weighs announced in advance. The weights given to each customer is proportional to his investment in the pool.
Also, since this is an Islamic mode of financing, therefore, in case of a loss, the Rub-ul-Maal (customer) and the Bank (Mudarib) bears the loss of the investment in proportion to the ratio of their investment to the pool.
-- Al Arabiya Digital