Islamic Banking Services in Malaysia

As the Islamic banking system developed, services offered by Islamic banks and banking institutions under Islamic Banking Scheme have become diversified (Table 1). Islamic banking services are very similar to those in conventional banks; however, some distinct differences can be observed. For example, current accounts and savings accounts are under Wadiah Yad Dhamanah (deposits with guarantee), Mudharabah (profit-sharing), and Qard (interest-free loan); depositors are guaranteed repayment of the whole amount of deposits and have no right to receive any return from Islamic banks. Islamic banks, however, may provide depositors with returns as gratitude because of the other concept of Mudharabah. In the case of investment accounts, money in a general investment account under Mudharabah (profit-sharing) and Qard (interest-free loan) is for an Islamic bank to invest in projects without instruction from depositors, whereas depositors with special or specific investment accounts under Mudharabah (profit-sharing) are able to instruct the bank as to which project to invest in.

Table 1: Islamic Banking Services in Malaysia 

Name of Product  Islamic Banking ProductsThe Concept of Shariah Used

current account-i

savings account-i

commodity Murabahah-i


Wadiah Yad Dhamanah, Mudharabah, Qard

Wadiah Yad Dhamanah, Mudharabah, Qard

Murabahah / Tawarruq



general investment account-i

special investment account-i

Mudharabah, Qard



asset financing-I


asset-backed financing-i 

benevolent loan-i

block discounting-i

bridging finance-i

bungalow lots financing-i 

cash line facility-i

club membership financing-i

Commodity Murabahah Financing-i

computer financing-I

contract financing-i

education financing-i


equipment financing-i Bai‟ Bithaman Ajil

factoring facility-i

fixed asset financing-I

floor stocking financing-i

hire purchase agency-i

home/house financing-i

industrial hire purchase-i

land financing-i


pawn broking-i

personal financing-i


plant & machinery financing-i

project financing-i


property financing-i

revolving credit facility-i

share financing-i

shop house financing-i

sundry financing-i

syndicated financing-i

term financing-i

tour financing-i

umrah & visitation financing-i

vehicle/automobile financing-i

working capital financing-i


Tawarruq / Murabahah, Mudharabah Musharakah, Ijarah




Bai‟ Dayn

Istisna‟, Bai‟ Bithaman Ajil


Bai‟ Bithaman Ajil

Bai‟ Inah, Bai‟ Bithaman Ajil, Murabahah

Bai‟ Bithaman Ajil

Murabahah, Tawarruq

Bai‟ Bithaman Ajil

Murabahah, Bai‟ Bithaman Ajil, Istisna

Musharakah, Mudharabah, Ijarah 

Murabahah, Bai‟ Bithaman Ajil, Bai‟ Inah

Bai‟ Bithaman Ajil

Bai‟ Dayn

Bai‟ Bithaman Ajil

Murabahah, Bai‟ Bithaman Ajil

hire purchase agency-i

Bai‟ Bithaman Ajil, Istisna‟

Variable Rate Bai‟ Bithaman Ajil Ijarah

Bai‟ Bithaman Ajil


Rahnu (Qard and Wadiah Yad Dhamanah)

Rahnu (Qard) Bai‟ Bithaman Ajil, Murabahah, Bai‟ Inah

Bai‟ Bithaman Ajil, Istisna, Ijarah

Bai‟ Bithaman Ajil, Istisna, Ijarah Musharakah, Mudharabah Tawarruq / Murabahah 

Bai‟ Bithaman Ajil, Istisna Variable Rate Bai‟ Bithaman Ajil 

Bai‟ Bithaman Ajil, Murabahah, Hiwalah, Bai‟ Inah

Bai‟ Bithaman Ajil, Bai‟ Inah

Bai‟ Bithaman Ajil, Istisna‟

Variable Rate Bai‟ Bithaman Ajil Bai‟ Bithaman Ajil

Istisna‟, Bai‟ Bithaman Ajil, Ijarah

Bai‟ Bithaman Ajil, Variable Rate Bai‟

Bithaman Ajil Bai‟ Bithaman Ajil 

Bai‟ Bithaman Ajil

Ijarah, Bai‟ Bithaman Ajil, Murabahah

Murabahah, Bai‟ Bithaman Ajil, Tawarruq / Murabahah, Musharakah, Mudharabah




Trade Finance

accepted bills-i

bank guarantee-i

bills of exchange-i

export credit refinancing-i

letter of credit-i

shipping guarantee-i

trust receipt-i

Murabahah, Bai‟ Day



Murabahah, Bai‟ Dayn

Wakalah, Murabahah, Ijarah, Bai‟ Bithaman Ajil


Wakalah, Murabahah


Card Services

charge card-i

credit card-i

debit card-i

home/house financing-i


Bai‟ Inah, Bai‟ Bithaman Ajil


Bai‟ Bithaman Ajil, Istisna‟s


Source: Characteristics of GCC Islamic Banks Investment in Malaysia, Ali Abusalah Elmabrok Mohammed
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