Mudharabah Investment Saving Account (profit/loss sharing saving account)

This is an investment account where customer deposits money for unspecified period of time and he/she will share both the profit and loss based on the pre agreed ratio after deploying the fund in any permissible activities chosen by the bank. The customer may withdraw his/her deposit at any time, but the Bank may impose restrictions on withdrawal during specified period based on prior agreement.

Basic features:

  • Depositors save their money for the benefit of profit sharing for undefined time;
  • Profit rate to be paid is determined based on the banks performance during the profit payment period;
  • The account is opened with zero profit sharing margin but periodically  the bank notifies the percentage of profit share to be paid to the depositors account and credit the account;
  • The required minimum initial deposit balance to open the account and to eligible for profit sharing for any profit distribution period is Birr 500.00 (Five Hundred only);
  • If the Bank suffers losses in its business ventures, the loss will be compensated to depositor or investor using reserve accounts;
  • If the reserve couldn’t cover the loss, it will entirely be borne by the depositor/investor (unless there is evidence of gross negligence on the part of the Bank);
  • Account that short fall of the minimum deposit requirement, during Profit Payment Period, shall not be eligible for profit sharing;
  • Customers are allowed to withdraw, from their credit balance, without any restriction/limitation as to its amount and timing;
  • Account operation shall be through the use of formats prepared for this purpose;
  • There will be no service charge in relation to operating such account. However, there could be service charges if transaction is effected via ATM, POS or other cash dispensing outlets, passbook changes and other cost recovery activities.

Mudarabah Fixed Time Deposit

Basic features:

  • It is similar with the Mudarabah Saving, but the time deposit is opened for a limited period (term);
  • Profit sharing margin can be variable among customers based on duration and volume of their deposit;
  • A Certificate of Mudarabah Time Deposit (CMTD) is given to the depositor;
  • The required minimum initial deposit to open this type of deposit and to eligible for profit sharing is Birr 5000.00 (Five Thousand only);
  • Depositors shall not participate in the management of the investment of the funds;
  • The costs of managing each of the Investment Fund (such as employees’ salaries) will be borne by the Bank (the Mudarib).
  • Based on the customers’ request specified in the Mudarabah deposit opening contract, Mudarabah Fixed Time deposit can be automatically revolved for the same period.
  • With regard to deposit duration there are three options:
    • Mudarabah 3 months Fixed Term Deposit;
    • Mudarabah 6 months Fixed Term Deposit; and
    • Mudarabah 12 months Fixed Term Deposit.
  • Profit is calculated on the deposit monthly, but credited to the depositors’ account on or after maturity of each deposit contract (s).