Islamic Fixed Deposit

Fixed Deposits are investments where you can earn returns on your funds when you deposit them in banks for a fixed period of time. Fixed deposits under Islamic banking are similar to conventional fixed deposits. Islamic banking follows the principles and rules of Shariah law. Many banks in Malaysia offer fixed deposits under Islamic banking.

How does Islamic fixed deposits work?

In conventional fixed deposits, you will earn interest on the funds you deposit based on the interest rate offered by the bank. Islamic banking follows the principle of Murabahah where both you and the bank can benefit by gaining profit out of investments.

Whenever you place an amount in Islamic fixed deposits, you are actually buying a commodity which is compliant with the Shariah principle. Then you are selling the same commodity to the bank at an agreed market price. In this way, the bank will earn profit out of the investment, and you will earn profit when your fixed deposit matures.

Different types of Islamic fixed deposits available in Malaysia

  • Maybank2u Islamic Fixed Deposit: Maybank offers Islamic fixed deposits with high profit rates that start from 2.95% p.a. to 3.40% p.a.
  • CIMB Islamic Fixed Deposit: CIMB offers 4 different types of fixed deposits under Islamic banking with profits rates that range from 2.95% p.a. up to 3.40% p.a.
  • Public Bank Islamic Fixed Deposit: Public Bank offers Islamic fixed deposit with profit rates starting from 2.95% p.a. onwards.
  • Hong Leong Islamic Fixed Deposit: Hong Leong offers 3 types of fixed deposits where the profit rates start from 2.80% p.a. up to 3.05% p.a.
  • MBSB Fixed Deposit: MBSB provides you with 3 packages of fixed deposits to choose from. The minimum initial placement associated with the FD is RM500 and the profit can be earned at a rate of up to 4.10% p.a.
  • HSBC Amanah Fixed Deposit: HSBC Amanah offers 2 types of fixed deposits including one for foreign currency. The profit rates range from 2.75% p.a. up to 3.90% p.a.
  • Bank Rakyat Islamic Fixed Deposit: Bank Rakyat offers long-term fixed deposits with profit rates starting from 3.30% p.a. onwards.
  • Bank Muamalat Fixed Deposit: Bank Muamalat offers fixed deposits for retail and corporate accounts. The profit rate ranges from 3.10% p.a. up to 4.00% p.a.

Features of Islamic fixed deposits:

  • You get a flexible tenure starting from 1 month up to 60 months for Islamic fixed deposits.
  • The minimum amount to open an Islamic fixed deposit account can be as low as RM500.
  • Islamic fixed deposits offer higher profits when compared with other fixed deposit schemes.
  • The profit on your Islamic fixed deposits will be paid to you in various repayment methods.
  • You are allowed to withdraw your Islamic fixed deposit before the maturity period.

Benefits of Islamic Fixed Deposits

  • The profit rates offered for Islamic fixed deposits are higher when compared to normal savings accounts.
  • You can use the FD certificate to enjoy other Shariah-compliant banking products and services under Islamic banking.
  • You can receive the profit on your Islamic fixed deposits either upon maturity, half-yearly, quarterly, or monthly.
  • The profit will be credited directly into your savings or current account when you opt for monthly or quarterly payments.
  • You can maximise the returns on your deposit amount in a guaranteed and secure way through Islamic fixed deposits.

Who can open Islamic fixed deposit accounts?

The following can open Islamic fixed deposit accounts:

  • Individuals, salaried and self-employed.
  • Associations, clubs and societies.
  • Sole proprietors.
  • Partnership firms.
  • Business enterprises.
  • Small and medium businesses.
  • Trustees.
  • Government Entities.

Documents required to open an Islamic fixed deposit?

  • Proof of identity.
  • Proof of age.
  • Proof of address.

How to open an Islamic fixed deposit account?

  • Manual Application: You need to visit the nearest Islamic branch to open a fixed deposit account. Carry the required documents with you along with the deposit amount.
  • Online Application: The bank website will provide an online application form which you need to fill and submit with relevant information. A bank representative will contact you to help you through the process.

Islamic Fixed Deposit Eligibility Criteria

The following are the eligibility criteria associated with Islamic FD:

  • The Islamic FDs are open to individuals who are 18 years old or older. There are several banks and institutions that offer FD accounts to juniors too. The individual applicants that are younger than 18 years of age generally require to have an in-trust account in the name of their parent/guardian.
  • Individuals who are citizens of Malaysia, permanent residents of Malaysia, or non-resident Malaysians can apply for Islamic fixed deposit accounts. There are a number of banks and financial institutions that offer FD packages to foreigners too.

Difference between Islamic and Conventional Fixed Deposit

The differences between a Conventional FD and Islamic FD are given below:

  • Islamic FD works on Shariah principles of Islamic banking.
  • The profit earned in an Islamic FD is based on the agreed profit sharing ratio while the interest earned in a conventional FD depends upon the pre-determined interest rate.
  • The profit earned in an Islamic fixed deposit is subject to maximum limit of profit under Shariah banking principle while the conventional FDs come with no such restriction.

Renewal and Withdrawal of Islamic Fixed Deposits

  • Renewal of an Islamic FD: When the FD reaches its maturity, you can choose to withdraw the entire amount including the profit earned. You can also opt to withdraw only the profit earned and renew the facility with the principal amount. But if you choose not to withdraw the amount from an FD at maturity, it automatically gets renewed.
  • Withdrawal of an Islamic FD: You can make a partial as well as full withdrawal from your FD at the time of maturity. Most of the banks and institutions also let you make a premature withdrawal on you fixed deposit. But doing the same may result in a loss of interest earned.


Q. Can I apply for an FD on a joint basis?

A. Yes, most of the banks and institutions offering FD facility let you open an account on a joint basis.

Q. What is the maximum amount I can put into an FD?

A. The maximum amount can vary from bank to bank and can also depend upon your age, tenure, and the package chosen.

Q. Can I open an FD account in any other currency than Malaysian Ringgit?

A. Yes, there are many banks that offer Foreign Currency Fixed Deposits. These FDs allow you to deposit an amount in major foreign currencies like Euro, US Dollar, Great Britain Pound, Australian Dollar, New Zealand Dollar, Singapore Dollar, Japanese Yen, Canadian Dollar, Swiss Franc, Chinese Yuan, Hong Kong Dollar, and many more.

Q. How much interest can I lose when I opt for a premature withdrawal on a deposit facility?

A. It depends upon the bank’s penalty rate and the number of months remaining when the withdrawal is made.

Q. How can I track of my fixed deposit account?

A. You can keep a track of your fixed deposit account via monthly statements.

Q. Once I decide to renew the facility, can I change the term associated to it?

A. Yes. If you choose to renew the facility at its maturity, you can change the deposit amount as well as the tenure of the facility.

Q. Is there a difference between profit rates of a general FD and profit rate associated with a FD for seniors?

A. Yes, the profit rate associated with a senior FD account is generally higher than that of a general FD account.

Q. Can I use my FD to get a tax relaxation?

A. Yes, an FD can be used for tax exemptions.

Q. Can I receive the amount in cash once I make withdrawal at facility’s maturity?

A. No, the amount at withdrawal is generally credited to your bank account.

Q. Are my deposits in an FD safe?

A. Your deposits of up to RM250,000 are eligible for protection by PIDM (Perbadanan Insurans Deposit Malaysia).

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