Reinventing people's relationship with Money

IHSAN Term Deposit Account

The Non-Interest Term Deposit accounts is also based on the Shari’ah concept of profit sharing and loss bearing investment (Mudarabah) is also a contract between the depositor (rabbulmal) and the bank (Mudarib) under which the deposit customer provides capital/ fund (deposit) to be managed by the bank and any profit generated from the capital is shared between the depositor and the bank according to mutually agreed profit sharing ratio.

However, the non-interest Term Deposit account differs from the non-interest savings deposit account in two elements:

The 2 elements are as follows:-

• The tenor of the deposit is specified.
• The customer is obliged to withdraw only at maturity as pre-agreed. Moreover, the profit share (return) in term Deposit account is usually higher compared to savings deposit account due to the relatively higher stickiness of term deposit as a more stable source of funds to the bank compared to savings deposit which cannot be deployed to higher yielding longer-term investments.