Bank Islam Fixed Deposit
Fixed deposits (also known as Term Deposits) are a great way to maximize earning potential on idle funds. It offers a higher rate of return than regular savings or current accounts, and most deposits offer flexible tenure options.
Term deposits traditionally generate income for the investor through the addition of interest, and this is not permissible in Islam as the Shariah law explicitly prohibits Muslims from investing in any avenue which deals with interest. Keeping this in mind, Bank Islam has developed the Term Deposit-i (Tawarruq) deposit scheme which is fully Shariah compliant, through the concept of Tawarruq.
Eligibility to open a Term Deposit-i (Tawarruq) Deposit with Bank Islam
In order to invest in this Term Deposit, one must first fulfil the following eligibility criteria:
- Minimum Age: 18 years.
- Resident Individuals.
- Non-Resident Individuals.
- Schools and Universities.
- Clubs and Associations.
- Mosques and religious bodies.
- Sole proprietorship businesses.
- Partnership businesses.
- Federal, Local, and State Governments.
- Public Authorities.
Features and benefits of the Bank Islam Term Deposit-i (Tawarruq)
Staying strictly within the stringent guidelines of Shariah law, Bank Islam’s Term Deposit-i (Tawarruq) deposit allows for fully Halal investments within the Tawarruq concept, which allows for commodities to be used as the underlying assets for transactions between commodity traders, the Bank, and the end customer.
Low initial deposit amounts, which vary depending on the tenure chosen:
- Deposits for a tenure of 1 month must be placed for a minimum of RM1,000.
- Deposits for a tenure of 2 months and above must be placed for a minimum of RM500.
- No maximum amount for deposits.
Flexible tenure options:
- 1 month to 60 months.
- For tenures of 1 month to 12 months, tenure must be chosen in multiples of 1 month.
- For tenures of 15 months to 60 months, tenures must be chosen in multiples of 3 months.
- Deposits are allowed only in the Malaysian Currency “RM”.
- Deposits are PIDM Insurable up to RM250,000.
- Premature withdrawals are permitted, but are subject to the following terms and conditions:
|Deposit Tenure||Premature withdrawal rebate|
|3 months and below.||No profit.|
|4 months and above, with uncompleted tenure of 3 months.||No profit.|
|4 months and above, with completed tenure of 3 months.||Profit payable at the rate of 50% of the original agreed profit rate.|
- When deposits are being withdrawn early, the Bank may charge back the Customer any applicable fees that the Bank has incurred for holding, handling, brokerage, etc. levied by a third party trader of commodities – which is charged for the purchase and sale of the commodity. This is deducted from the Sale Price (Murabahah).
Frequency of profit payment depends on the tenure option chosen:
- For tenures of up to 1 year, profits will be paid on maturity.
- For tenures of above 1 year, profits will be paid on a half-yearly basis.
- The auto renewal facility is allowed under these circumstances:
- The same deposit amount for the same frequency can be auto renewed.
- The deposit amount plus profits for the same tenure can be auto renewed.
- The profit rate for auto renewals is based on the prevailing profit rate of the Bank at the time of renewal.
- There is no brokerage fee as it is paid for by the bank itself.
- Commodities traded under the Murabahah concept are fully Shariah compliant, and include metals (not gold and silver), crude palm oil, etc.
- Partial withdrawals are not allowed.
Bank Islam Term Deposit-i (Tawarruq) Deposit Rates
The deposit rates mentioned below are the applicable rates between the 1st and 31st of March, 2016.
|Tenure option chosen||Term Deposit-i (Tawarruq) Profit Rate|
|1 month.||3.30% p.a.|
|2 months.||3.30% p.a.|
|3 months.||3.35% p.a.|
|4 months.||3.35% p.a.|
|5 months.||3.35% p.a.|
|6 months.||3.40% p.a.|
|7 months.||3.40% p.a.|
|8 months.||3.40% p.a.|
|9 months.||3.50% p.a.|
|10 months.||3.50% p.a.|
|11 months.||3.50% p.a.|
|12 months.||3.60% p.a.|
|15 months.||3.70% p.a.|
|18 months.||3.70% p.a.|
|21 months.||3.70% p.a.|
|24 months.||3.70% p.a.|
|36 months.||3.70% p.a.|
|48 months.||3.70% p.a.|
|60 months.||3.70% p.a.|
FAQs on the Bank Islam Term Deposit-i (Tawarruq)
What makes this Term Deposit Halal / Shariah compliant?
This Term Deposit product operates completely under the Shariah concept of Tawarruq, and trades on commodities based on the Shariah concept of Murabahah. There is no interest involved in this transaction, and it is totally Halal.
Can joint accounts be opened under this Term Deposit scheme?
Yes, joint accounts can be opened and held, but only by individuals (not companies, partnerships, etc.).
What does the bank give customers who invest in this plan?
In addition to the declared profit rate, the bank will issue Term Deposit-i (Tawarruq) certificates to authenticate and validate the transaction, upon opening the account.
What are the requirements for deposit renewal?
Every time the deposit is renewed, the customer will require a new commodity purchase and sale transaction (inclusive of auto renewal).
*Please note that all amounts, tenures, repayment requirements, time frames, interest rates, other rates, charges, fees, ceilings, requirements, criteria, features, benefits, exclusions, calculations, ratios, ratings, terms and conditions mentioned above are as of March, 2016, and are subject to change at any time. All banks / NBFCs / insurance providers / financial service providers / companies, etc. mentioned above retain all rights to modify, replace, or add to or subtract from any of the above, in any way, at any time, and at their own discretion. You are requested to reconfirm the same with your chosen bank / company / NBFC / insurance provider / financial service provider, etc. before making any financial commitments.
Other Products offered by Bank Islam:
Apart from offering Fixed Deposit,Bank Islam offers other products and services which include: