Restricted investment account
An investment account whose holder limits where, how or for what purpose the bank may invest the funds.
Restricted investment accounts are accounts whose holders authorise investment of their funds under mudarabah or wakalah with restrictions on where, how and for what purpose the funds are invested, as the IFSB defines them. The bank cannot commingle these funds freely with its own. They are often managed off the balance sheet, and AAOIFI has an accounting standard on off-balance-sheet assets under management.
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
Unrestricted investment accountAn investment account whose funds the bank may invest at its discretion and commingle with its own in a pooled portfolio.Restricted mudarabahA mudarabah in which the capital provider limits where, how or for what the capital may be invested.Off-balance-sheet assets under managementAssets an institution manages for others, such as restricted investment accounts, that are reported outside its own balance sheet.Investment poolA group of assets funded by identified sources, such as shareholders or investment account holders, whose income is allocated to them.