Unrestricted Investment Account

Definition of "Unrestricted Investment Account"

Relating to Islamic banking, refers to an investment account where the account holder authorizes the Islamic bank to invest the account holder’s funds on the basis of mudarabah contract in a manner which the Islamic bank deems appropriate without laying down any restrictions as to where, how and for what purpose the funds should be invested. Under the arrangement the Islamic bank can commingle the investment account holder’s funds with its own funds (owner’s equity) or with other funds the Islamic bank has the right to use. The investment account holders and the Islamic bank generally participate in the returns on the invested funds.