8 Investment Accounts
Investment accounts are a Shariah compliant source of financing for banks and its
customers. The returns on the underlying asset depend on the type of Shariah contract
applied to the investment account. The three types of Shariah contracts are:
- Musharakah – Profit and loss sharing
- Mudarabah – Profit sharing and loss bearing
- Wakalah – Customer pays an agency fee based on the profits
The two types of Investment Accounts are Restricted Investment Accounts (RA) and Unrestricted Investment Accounts (UA). The differences between the two are illustrated in the table below:
Table 7-1 Difference between Restricted Investment Accounts and Unrestricted Investment Accounts
| Restricted Investment Accounts (RA) | Unrestricted Investment Accounts (UA) |
|---|---|
| Specific underlying assets | General underlying assets |
| Fixed/unfixed tenure and balance | Fixed tenure and balance |
| Specific withdrawal terms | Flexible withdrawal terms |