Islamic deposit
A deposit product whose principal the Islamic bank is obliged to repay, as distinct from an investment account that shares risk.
An Islamic deposit is a product that places a contractual obligation on the Islamic bank to repay the principal, in full or in part, as the client demands. The IADI-IFSB core principles use this definition to separate deposits, typically based on qard or wadiah, from investment accounts, whose holders share in investment risk. The distinction matters for deposit insurance, capital treatment and what the bank may promise in its marketing.
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
WadiahSafekeeping: an asset placed with a custodian to be kept and returned on demand.QardA loan of money to be repaid in an equivalent amount; any benefit stipulated for the lender is riba.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.Islamic deposit insuranceA deposit protection scheme designed on Islamic lines to protect depositors of Islamic banks if a bank fails.