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OPERATIONALISATION OF IA (Intermediation Functions of Islamic Banks in…
OPERATIONALISATION OF IA
Intermediation Functions of Islamic Banks in Operationalising an Investment Account
2.Application of Funds
Islamic bank channels the investment account fund to
financing assets
Conduct due diligence on prospective
financing assets to ensure that risks
undertaken are aligned with the
investment mandate
Ensure proper governance to
safeguard customers’ interests
and the bank’s reputation
Maintain clear separation of
funds to facilitate distribution of
principal and returns, and
resolution on winding-up
Match funds received with
underlying assets according
to the investment mandate
Continuous Roles
Conduct regular
monitoring
Report
performance to
customers
Distribute profit to
customers at pre-agreed
terms
Identify exit mechanism and
perform recovery, if required
1.Acceptance of funds
Customer places funds in Islamic bank under investment account
Provide disclosures on the assets
underlying different investment
accounts and related risk-return
profiles
Recommend appropriate products
in line with the customer’s risk
appetite
Conduct suitability assessment to
assess eligibility and risk appetite
of potential customer
Propose Shariah contracts which
will define the intermediary’s role
and bases for attributing returns
generated to the intermediary and
the customer
