Investment account holder
A customer who places funds in an investment account and shares in its returns and risks, rather than holding a deposit claim.
An investment account holder places funds with an Islamic bank under a mudarabah, musharakah or investment agency contract. The IADI-IFSB core principles describe these funds as pooled for profit sharing and loss bearing by the capital provider, or managed by the bank as agent for a fee. Because holders bear investment risk but have no shareholder vote, IFSB-30 calls for a governance committee of the board to protect their interests.
Sources
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
Profit-sharing investment account (PSIA)An account whose funds the bank invests, usually as mudarib, with returns based on actual results rather than a promised rate.Rabb al-malThe capital provider in a mudarabah, who funds the venture, shares profit by the agreed ratio and bears financial loss.Displaced commercial riskPressure on an Islamic bank to give up part of its own profit so investment account holders earn a competitive return.Profit allocation (investment accounts)The method for dividing a pool's income between the bank and investment account holders, including reserves and weightages.