Amal Wakala investment deposit

Fatawa Question

The fatwa and sharia supervisory board of RAKBANK-AMAL("Sharia Board") has reviewed the underlying sharia structure and documentation in respect of the Amal Wakala investment deposit, offered to its customers by RAKBANK-AMAL and hereby issues the sharia pronouncement / fatwa considering the following structure and documentation : Structure : 1. RAKBANK-AMAL and the customers ("Customers") will enter into a Wakala agreement whereby the customers will appoint RAKBANK-AMAL as their agent (Wakeel) to invest their investment amount (the "Wakala Capital"). 2. The Wakala capital provided by the customers (in their capacity as Mumakkil) to RAKBANK-AMAL (in its capacity as Wakeel) will be invested by RAKBANK-AMAL on an unrestricted Wakala basis. 3. RAKBANK-AMAL will invest the Wakala capital in the common pool where the shareholders and depositors funds are invested (the "Common Pool"). 4. Apart from other terms and conditions of Wakala agreement as may be approved by the sharia board, Wakala agreement shall clearly provide for the following : 4.1. Fixed Wakala fee payable to RAKBANK-AMAL for its services provided to the customers as their agent (Wakeel) under the terms and conditions of the Wakala agreement. 4.2. Details of business activity in which the Wakala capital will be invested and the expected profit (the "Expected Profit) which the RAKBANK-AMAL anticipates that it will be able to earn by investing the Wakala Capital in the identified business activities. 4.3. Mechanism for liquidation of Wakala on an actual or constructive liquidation basis. 4.4. A clear and transparent mechanism for the calculation and payment of incentive to RAKBANK-AMAL if the realized profit on the Wakala capital is in excess of the expected profit. 5. 6. Any press, electronic media or other advertisements must be based on the following guidelines : 6.1. Only the expected profit can be mentioned in the advertisements which the wakeel anticipates that it will be able to earn on the Wakala capital based on the business plan / feasibility study and past experience. 6.2. In no way the advertisement should give an idea to the customers that the capital is protected and / or the profit is guaranteed. 6.3. It should be clearly mentioned that the Wakala capital will be invested in the common pool. 6.4. it should also be mentioned that the customers will agree in the Wakala agreement that any profit earned on Wakala capital in excess of the estimated profit will be granted by the customers to RAKBANK-AMAL as incentive. 6.5. Fixed fee to be paid by the Muwakkil to the Wakeel for performing the services contemplated by the Wakala agreement. Documents : 1. Structure memorandum in respect to Amal Wakala investment deposit 2. Master Wakala agreement between the customers and the bank.

Fatwa

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Publisher

The National Bank Ras al-Khaimah Islamic Banking Division (RAKislamic) Fatwa and Sharia Supervisory Board

Publication Date

2012-05-02

Country of Publication

United Arab Emirates

Main Subjects

Economics & Business Administration
Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Investments
• Bank deposits
• Agency(Law)

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-722946

• APA
• MLA
• AMA