Banking Services in Islamic Banks - Scope of the Standard

Transcription

1. Shari ’ah Standard No. (28): Banking Services in Islamic Banks Statement of the Standard 1. Scope of the Standard This standard covers the most important banking services that do not involve lending and borrowing, and which the Institutions render to their customers, directly or through other parties, with the aim of facilitating internal and external operations and activities performed by these customers. It does not cover loan and investment services, or other banking services for which separate Shari’ah standards have already been issued, such as trading in currencies, debit and credit cards, investment accounts, and investment Sukuk. 2. Types of Banking Services and Their Shari’ah Status Institutions may provide banking services against fees payable in lump sum or as a percentage share of the value of the service in question, as indicated in the following cases: 2/1 Custodian services Institutions may receive Shari’ah-accepted documents and financial papers from their customers as a custodian of such documents/ financial papers, and may charge fees for such services. 2/2 Contracting agency services A customer may use the institution as an agent for concluding contracts such as sale, purchase, and lease contracts contracts,, against a fee payable to the institution. 2/3 Subscription arrangement services 2/3/1 The institution may act as an agent of the founding shareholders of a Shari’ah-accepted and technically licensed joint stock company, in performing the various steps of the public issue, or issuing new 724
2. Shari ’ah Standard No. (28): Banking Services in Islamic Banks shares to increase the capital of the company, and may receive fees for such services. However, the fees thus earned by the Institution should not comprise any remuneration for extending credit, if it happens to be part of the service. 2/3/2 The Institution may arrange, and receive fees for, engaging a third party to underwrite the subscription. The Institution may also underwrite the subscription itself, without charging any fees for the mere act of underwriting. However, the Institution may charge the actual expenses it incurs in providing other services like conducting studies or marketing the shares. [see Shari’ah Standard No. (5) on Guarantees, item 6/7] 2/4 Services of conducting studies and consultancies 2/4/1 The institution may conduct, against a fee or free of charge, feasibility studies or other studies relating to issuance of shares. 2/4/2 The institution may act as an agent of its customers, for a fee or free of charge, in performing services that relate to real estate properties (residential buildings, commercial blocks, offices, etc.) as well as movable assets. 2/5 Collection and payment services 2/5/1 The institution may accept requests of its customers to collect their dues with, or pay their commitments to other parties. For instance, it can perform collection of cheques, debt notes, and promissory notes from debtors, or vouchers of shares and Sukuk owned by the customers, and deposit the proceeds in their accounts. It can also make payments on behalf of its customers and charge their accounts. For all such services, the Institution may receive fees from the customers or their agents. 2/5/2 The institution may pay wages and salaries on behalf of its customers. 2/5/3 The institution may execute standing collection and payment orders. 725
3. Shari ’ah Standard No. (28): Banking Services in Islamic Banks 2/5/4 The institution should refrain from collection when it realizes that it involves an impermissible practice, or leads to discounting of a commercial paper. [see Shari’ah Standard No. (16) on Commercial Paper, item 5] 2/6 Accounts’ services 2/6/1 The institution may provide additional services to the owners of its investment or current accounts when they desire so, and charge fees for such services. 2/6/2 The institution may provide free services to the owners of its investment or current accounts, provided that the services rendered to the owners of the current accounts are not set as a precondition or constitute a traditionally observed prerequisite for opening the account. [see Shari’ah Standard No. (19) on Loan (Qard), item 10/2] 2/7 Services of safe deposit vaults 2/7/1 The institution may provide the services of leasing safe deposit vaults to its customers. This is done through signing a contract according to which the Institution allocates a safe deposit vault within its premises for the customer to use against a specific fee. The deal here is based on Ijarah (hiring) contract that entitles the customer to the vault’s usufruct. 2/7/2 The institution is responsible for ensuring the safety of the vault. However, it does not guarantee the safety of items kept in vault except in case of misconduct or negligence in keeping the vault. 2/8 Services of cards and their related bodies See Shari’ah Standard No. (2) on Debit Card, Charge Card and Credit Card. 2/9 Zakah account services See Shari’ah Standard No. (35) on Zakah, item 2/2. 2/10 Suretyship services See Shari’ah Standard No. (5) on Guarantees, item 6 726
4. Shari ’ah Standard No. (28): Banking Services in Islamic Banks 2/11 Cheques services See Shari’ah Standard No. (16) on Commercial Papers, item 3/3 and item 7. 3. Date of Issuance of the Standard This Standard was issued on 12 Jumada I, 1427 A.H., corresponding to 8 June 2006 A.D. 727