Deposits and accounts

Current account (Islamic)

A repayable-on-demand account that AAOIFI treats as a loan to the bank, so the holder is owed the balance and no stipulated benefit.

An Islamic current account holds money that the customer can withdraw on demand. AAOIFI's partnership standard notes that current account funds are juristically classified as loans to the institution, which means the bank guarantees the balance and may use the money, while the customer may not receive any benefit stipulated for the loan. AAOIFI's banking services standard allows free services to current account holders only if they are not a precondition, or a customary prerequisite, for opening the account. Bank Negara Malaysia's qard policy document applies the same logic to deposits taken on a qard basis.

Sources

AAOIFI Shari'ah Standards, English edition (full text, PDF): Shari'ah Standard No. 12, item 3/1/2/5, and No. 28, Banking Services, item 2/6/2

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

Related terms

QardA loan of money to be repaid in an equivalent amount; any benefit stipulated for the lender is riba.WadiahSafekeeping: an asset placed with a custodian to be kept and returned on demand.HibahA gift: a transfer of ownership without consideration, sometimes paid by banks at their discretion to account holders.Banking service feeA fee for a banking service that involves no lending, charged as a lump sum or a percentage of the service's value.Islamic depositA deposit product whose principal the Islamic bank is obliged to repay, as distinct from an investment account that shares risk.