Islamic Banking Principles and Practices

1. Islamic Banking The Arabic word Sharia refers to the straight path to be followed. These are the guidelines for all mankind within the teachings of Islam or Sharia refers to commands, prohibitions, guidance & principles that God has addressed to mankind pertaining to their conduct...

1. Islamic Banking The Arabic word Sharia refers to the straight path to be followed. These are the guidelines for all mankind within the teachings of Islam or Sharia refers to commands, prohibitions, guidance & principles that God has addressed to mankind pertaining to their conduct in this world and salvation in the next.  Introduction to Islamic Banking Islamic banking is a banking system which runs in accordance with the principles of Islamic Commercial ruling. Islamic banking system prohibits elements of Riba (Interest) & deal with Asset/Service based transactions.  Conventional perspective: Grounded on this concept the Conventional bank borrow the excess money from the surplus units on Interest and lend the same to the deficit units on Interest where the return (capital plus interest) for both deposit and investment are guaranteed.  Islamic perspective: For an Islamic bank lending & borrowing of money is prohibited because it involves elements of Riba. Hence, most of the transactions are based on an Asset transfer or exchange. Conventional Banking Islamic Banking Functions & Operations are based on fully man Functions & Operations are based on Sharia made principles principles Investor is assured of pre-determined rate of Promotes profit & loss sharing concept & risk interest and almost risk free bearing Aim at maximizing the profit without any Aim at maximizing the profit but subject to restrictions Sharia restrictions Partners, investors & traders, buyer or seller Lending & borrowing relationship relationship Based on money lending. Money is a medium Encourage asset-based financing and based on of exchange and not a commodity, its sale and commodity trading purchase is prohibited in Islam   Islamic Rule of Contract A valid sale has four essential elements. They are: o Parties of Contract: The parties who were involved in the sale should be sane & matured o Offer & Acceptance: By Oral / Verbal, Act or in Writing o Subject matter of Sale: Asset to be sold must be exist, determined, unconditional, instant & absolute, pure, in the ownership of the seller at the time of sale, in physical or constructive possession of the seller, useful, determinately known to the buyer & seller and must not be used for un-Islamic purposes o Consideration / Price: The product should be a valuable item, known, specified & certain  Prohibited Elements in Islamic Banking  Riba / Interest: The word Riba means excess, increase or addition. Riba in other words is effortless gain or the profit which is received without giving anything in exchange. Riba in Banking terms means receiving or paying an increase amount over the principle amount of the loan as condition of contract.  Gharar / Uncertainty: Gharar means a risky or hazardous sale, where details concerning the subject matter is unknown or uncertain. In other words, Gharar is where only one party benefits out of the transaction. Uncertainty cannot be avoided altogether in a business. Excessive Uncertainty and Nominal Uncertainty. Gharar causes injustice & may lead to dishonesty & fraudulent activities. Example: Sale of a good over which the seller has no control. Making a contract conditional on an unknown event. Any sale in which the subject matter is not clear.  Maysir / Gambling: Maysir means gambling. It refers to all games of chances where a person gains at the cost of others. The amount of money at risk might bring huge sums of money or might be lost. Islamic economics encourages profit and risk sharing.  Dhulm / Violation: The below products are violated in financing through the Islamic Principles; o Alcohol or alcoholic products o Pork and pork products o Meat or meat products that are not Halal o Tobacco and tobacco products  o Arms and armaments o Gambling Services and Lotteries o Activities that are harmful to human being o Activities that damage the environment o Child Labor 2. Inquiries pertaining to accounts Account inquiries are general inquiries made by callers who wish to check for account balances, blocked amounts, account status, Cheque Book Status, Statements, ATM/Branch locations, promotions and inquiries pertaining to specific transactions, such as cheque realizations, any other related queries pertaining to accounts or transactions. Upon customer request, the requested information should be provided to the customer (post successful verification) subject to availability of details in the core banking system. The CSR will coordinate with the relevant branch / department (if necessary) to provide information to the customer or direct the customer to the branch for further assistance.  Using of Unique Identification Numbers (UIN) for opening of accounts In view of strengthening the soundness and uniformity of the customer identification documents/numbers used by the banks for opening, the Central Bank of Sri Lanka has issued directions to all the banks on mandating the record of Unique Identification Number (UINs) as follows: Individuals:  Sri Lankan Citizens – National Identity Card (NIC) number  Sri Lankan Citizens (Residing outside Sri Lanka / PR & TR holders) - National Identity Card (NIC) number  Sri Lankan Dual Citizens (Residing in Sri Lanka) - National Identity Card (NIC) number  Sri Lankan Dual Citizens (Residing outside Sri Lanka) - National Identity Card (NIC) number  Non Sri Lankan Citizen – Foreign Passport Number  Minor deposits – Date of Birth (DOB) & Birth Certificate Number (BC) Institutions:  Companies registered under the Companies Act – Company Registration Number  Non-Governmental Organizations(NGO) – Registration Number issued by the National Secretariat for NGOs  Institutions registered under divisional/local government bodies such as Proprietorships, Partnerships/Joint Ventures – Business Registration Number (BR)   All other entities such as Clubs, Associations, Societies – Registration Number issued by the relevant authorities  Identification of the Residential Status of Dual Citizens At the time of opening the account, any dual citizen who has been in Sri Lanka for a period of more than 182 days in aggregate during the preceding twelve months shall be deemed as “Dual Citizens Residing in Sri Lanka” Accordingly, dual citizens who have been residing abroad for a period of 183 or more in aggregate during the preceding twelve months shall be considered as “Dual Citizens Residing outside Sri Lanka” in terms of opening the accounts. Branches are recommended to scrutinize Dual citizens’ passports prudently in order to determine of the “Residential Status” by calculating the duration of stay of such persons, prior to opening accounts. In this case, a declaration form should be obtained from such customers for the record purposes. 3. Mudaraba accounts This is the most basic type of account customers can open at any bank. A Savings Account, by definition, allows the customers to deposit their money, safe with the bank, so they don't have to carry it around with them or hide it in that rusted old steel safe at home. However, the customer can withdraw these funds when they need. In Islamic banking, Savings Account is a special kind of partnership where one partner gives money to another for investing it in a viable commercial enterprise. The investments come from the first partner who is called [RABB-UL-MAL - the investor / customer] while the management and work is an exclusive responsibility of the other partner who is called the [MUDARIB - The bank] In other words, Savings Account is a partnership in profit where, by one partner provides capital (Rab-Al-Mal) and other partner provides labor (Mudarib). The parties who are involved in Mudaraba Agreement will be,  The Rab-al-Maal: The partner who invest the money or the Customer or The investor  Mudarib: The Fund Manager who is exclusively responsible to manage the investments or The bank  The profit sharing ratio (PSR) Profits generated are shared between the parties according to a pre-agreed ratio. If there is a loss, rabb-al-mal (Customer) will lose his capital, and the mudarib (Bank) will lose the time and effort invested in the project. The below table contains the PSR for the Savings Account customers, Profit Sharing Ratio (PSR) will be agreed by the parties before they invest in Mudaraba Accounts. PSR may vary in terms of different account types & tenor. Mudarib cannot guarantee a specific rate of return on investment accounts. The customer & the Bank cannot agree on a fixed amount or a fixed rate as their profit returns. In case of a genuine loss, the Rab-ul-Maal will be losing his investment (as the maximum value) in the Mudaraba Fund whereas the Mudarib will be losing his time and efforts being not paid. However, if the loss occurred is due to the wilful mismanagement or breach of contracts or violation of terms or negligence on his part, then it has to be borne by the Mudarib alone. The loss in a few transactions will not result in the entire investment falling into loss, rather it will have a drop in the profit earned  The profit distribution Mainly the profit distribution is accomplished after proper calculation of the costs in a business and the amount obtained as final profit by the Team called “Asset & Liability Committee (ALCO)”. The “ALCO” team consists of 15-20 members (from Finance department, Treasury department, deposit mobilization team & retail advances team) who finalizes on the rates for the accounts. Then that profit is distributed according to the PSR among the stakeholders for the specific account types at the end of the month.   Normal | Ladies | Senior Citizen savings accounts A savings account is an effective way to store money in a secure location where it can earn profit. With a savings account, the customer can maintain their savings in a liquid state (access funds whenever want). Below are the general features of Normal, Ladies & Senior Citizen Savings Accounts. o Customers, who are Sri Lankan above the age of 18 can open the Normal & Ladies Savings Accounts o Customers, who are Sri Lankan above the age of 55 can open the Senior Citizen Savings Accounts o The initial deposit for these accounts are LKR 1,000.00 o Customers are recommended to maintain a minimum balance of LKR 1,000.00 in the account. o Customers can open the accounts individually or jointly o The customer select the account type as per their convenient (Passbook or Statement) o If the customer selected the Passbook account, the initial issuance of the passbook of Free of Charge o If the customer misplaced the passbook, he/she has to visit the branch and submit Indemnity as per format available at branches with the charge of LKR 500.00 included for Replacement of a Passbook o The mode of statement and the periodicity can be chosen by the customers (Physical or E-Statement) o The charges are free for E-Statements o If the customer require to close the account, he/she should visit any nearest branch to account closure application along with the charges of LKR 500.00  Benefits of the accounts i. Ladies Savings Accounts: Attractive Profit Sharing Ratio Exclusive Ladies’ branch at Colombo 3 Exclusive Ladies’ units at selected branches ii. Senior Citizen Savings Accounts: Priority services at the branches Free initial visa debit card Higher profit sharing ratios Access to higher PSR on 12 months TI  Documents required to open an account i. NIC / Passport / Driving License ii. Address Verification Proof (if the address differ from the NIC) If the account is opened by producing the Passport or if the address given to the Bank differs from the address in the NIC / Driving License, one of the accepted documents should be submitted for address verification.  Voting card issued within one month.  Current utility bill (Electricity / Water - Valid with last 3 months period) oIf the utility bill is in the name of the spouse, a copy of the marriage certificate should be submitted o If the utility bill is in the name of the parents, a copy of a birth certificate should be submitted o If the utility bill is in the name of the landlord, a copy of the tenancy / lease agreement  A letter from Gramaniladari  Tenancy, lease agreement (Latest) o with billing proof of the owner o If the tenancy, lease agreement is in the name of the spouse / parent's relevant marriage certificate or birth certificate should be submitted  Children Savings account A minor or Children savings account is designed for kids under age 18. The child and a parent or guardian act as joint account holders in this type of accounts. Below are the general features of Children Savings Accounts.  The Minor should be below 18 years.  The initial deposit for these accounts are LKR 1,000.00  A Passbook will be provided to the customer to monitor account growth  If the passbook pages were over, the customer can visit to any nearest branch and request for a new passbook. In this case, the passbook will be issued for Free of Charge.  General withdrawals are not allowed in Children’s savings account except for below 3 reasons. In that case, the Guardian will have to submit the supporting documents to the branch to receive the approval for the withdrawals. o If the minor is deceased o For minor’s medical purpose o For minor’s education purpose  Benefits of the accounts  Profits payable on a monthly basis  Higher profit sharing ratio  Annual promotions to receive exciting gifts  Reward scheme for high flyers in Grade 5 Scholarship  Documents required to open an account  Minor’s Birth certificates   Parent’s / Guardian’s National Identity Card (NIC) / Passport / Driving License  Address Verification Proof of the guardian (if the address differ from the NIC) If the minor attains the age of maturity, the account will be converted to normal Mudaraba Account upon the visit of the Minor to the branch along with his/her NIC. Till the account gets converted, the Minor Savings Account will be closed and the funds will be transferred to Maturity Savings Accounts which has the lowest profits comparing to all the Savings Accounts.  Salary Savings account At its core, a salary account is like a savings account. The customers receives their salaries in the salary savings accounts, while the savings account is generally used for saving & managing day-to-day expenses. Basically, the Salary savings accounts can be categorized into two categories and they are;  Personal Salary Savings Account: The customer can open the account under his/her name but requires to submit the employment proof from the firm.  Corporate Salary Savings Account: An employer opens for an employee to deposit their salary every month  Benefits of the accounts  No minimum balance requirement and No initial deposit  Free initial VISA Debit card  SMS alerts on Salary remittances, day end balance, deposits/ withdrawals etc  Free of charge ATM withdrawal at Amana Bank ATMs and discounted charges from Commercial Bank ATMs  50% waive off on bank charges for foreign currency draft issuance  Financing up to 7 years and special rentals for Vehicle Finance  Financing up to 15 years and special pricing on Home Finance  Eligibility for Easy Payment Plan  Repayment up to 8 years for Solar Finance  Special Pricing on Education Finance  Higher profit sharing ratio for corporate salary savings accounts  Documents required to open an account  Individual's NIC / Passport / Driving License  Address Verification Proof (if the address differ from the NIC)  Proof of employment (Pay slips / ID)   Salary assignment letter  Corporate Savings account A business savings account is a bank account that the customer can use to save earnings for future business use. The customer can quickly and easily access money from his/her savings account when they need it.  Initial deposit is LKR 1,000/-  Profit will be credited monthly at a pre-agreed ratio  Periodic Statements including e-statements or Passbook to record and monitor account transactions  Documents required to open an account Limited Liability Co Clubs & Societies Public Co Duly completed Mandate & Duly completed Mandate & Duly completed Mandate & Signature Card Signature Card Signature Card NIC copies of the office bearers NIC copies (Original Sighted) NIC copies (Original Sighted) (Original Sighted) Form 48 / Similar forms according Form 48 / Similar forms according Copy of Constitution (Original to the new companies act (Original to the new companies act Sighted & Certified by President & sighted & certified by the company (Original sighted & certified by the Secretary) secretary with the date) company secretary with the date) Certificate of Incorporation Minutes to open the account Certificate to commence business (Original sighted & certified by the (Original sighted & certified by the (Original sighted & certified by the company secretary with the date) President & Secretary) company secretary with the date) Memorandum & Article (Original Minutes for the election of board Certificate of Incorporation sighted & certified by the company (Original sighted & certified by the (Original sighted & certified by the secretary with the date) President & Secretary) company secretary with the date) Operating Instructions (Original Memorandum & Articles (Original Board Resolution sighted & certified by the President sighted & certified by the & Secretary) company secretary with the date) Address Verification (Original Address Verification (Original Address Verification (Original Sighted) Sighted Sighted Board Resolution GBS Duly Signed GBS Duly Signed GBS Duly Signed MIS Form MIS Form MIS Form  Pension Savings account Amãna Bank Pension Saver is specially designed for Pensioners keeping in mind that your banking requirements are different and need special care. We offer a unique account that avails special privileges and value added services to enjoy hassle free banking in line with your lifestyle  What’s on offer  Free initial VISA Debit Card  Higher profit sharing ratio - (Visit our website for profit sharing ratios and past profits paid)  Priority services at branches  Eligibility for Easy Payment Plan facility  Vehicle Leasing and Home Financing facility  Access to higher profit sharing ratio on Senior Citizen 12 months Term Investment Accounts (monthly profits)  Free of charge withdrawals at Amãna Bank ATMs and discounted charges at Commercial Bank ATMs  Free issuance of Pay Orders for government organizations*  50% discount on Demand Draft issuance charges for professional bodies  Rs 250/- Pre loaded voucher for Children’s Savings accounts introduced  Internet Banking facilit   Personal Foreign Currency Savings account (PFCA) Personal Foreign Currency Account (PFCA) is a special account which can be opened in designated foreign currencies and it enables the customer to remit their hard earned foreign currency to the motherland which could be invested in many attractive investment products. PFC Accounts can be opened with United Stated Dollar (USD) | European Rupee (EURO) | Great Britain Pound (GBP) | Australian Dollar (AUD) | Japanese Yen (JPY) | Singaporean Dollar (SGD) The customer can open the account with USD 100 or equivalent to other currencies. However if the customer opens an account under NRFC category, exceptionally the customer can open an account with 0 balance and then the account will get activated upon the salary remitted to the account. Further, there will be a charge of USD 5 or equivalent to other currencies when the branch closes the account upon the customer request. The below table contains the PSR for the PFCA customers,  Eligibility criteria to open a PFCA accounts  Individuals including minors who are Sri Lankan nationals.  Individuals of Sri Lankan origin including minors who are resident outside Sri Lanka.  Foreign Nationals residing in Sri Lanka.  Foreign Nationals either on temporary visit to Sri Lanka or intending to visit Sri Lanka.  Minor Savings Accounts  Documents required to open an account I. Residents Foreign Currency Account (RFC)  NIC / Passport / Driving License  Address Verification Documents  Mandate forms duly completed and signed II. Non Nationals Resident Foreign Currency Account (NNRFC)  Foreign Passport  Address Verification Documents  Resident Visa  Employment Contract with designated company  Salary Particulars - should receive in FCY   Mandate forms duly completed and signed  Copy of Valid visa page  Photocopy of passport (pages where photograph and personal details are available) III. Non Resident Foreign Currency Account (NRFC)  Sri Lankan Passport  Address Verification Documents  Work Visa  Employment Contract  Copy of Valid visa page  Mandate forms duly completed and signed  Photocopy of passport (pages where photograph and personal details are available) IV. Non Nationals Non Resident Foreign Currency Account (NRNNFC)  Foreign Passport  Address Verification Documents  Copy of Valid visa page  Letter of introduction from the Bank at which the prospective account holder maintains an account overseas  Mandate forms duly completed and signed  Photocopy of passport (pages where photograph and personal details are available) V. FCY Minor Savings Accounts  Birth Certificate of the Minor  Address Verification Documents of the Minor  Valid Passport / Visa of the Guardian The Minors can be a Resident or Non Resident but the Parent / Guardian mandatorily must be a Non – Resident  Permitted withdrawals through PFCA o Calling over branch / RM personally and on providing your passport or national identity card o Can make withdrawals in the currency of the country, through any ATM displaying Visa Debit Cards. o For obtaining currency notes for travel abroad by providing the documents such as “Valid Passport, Up & Down Visa, Return Ticket, Purpose of Travel etc….   Business Foreign Currency Savings account (BFCA) The Business Foreign Currency Account (BFCA) is an account designed for Individuals or business entities that earn foreign exchange. The below table contains the PSR for the PFCA customers, Account Type Client Bank EUR 10% 90% GBP 25% 75% USD 20% 80% BFCA Accounts can be opened with United Stated Dollar (USD) | European Rupee (EURO) | Great Britain Pound (GBP) | Australian Dollar (AUD) | Japanese Yen (JPY) | Singaporean Dollar (SGD)  Eligibility criteria to open a BFCA accounts  An individual resident in Sri Lanka  A sole proprietorship or partnership registered in Sri Lanka where the proprietor or a majority of partners are resident in Sri Lanka (in case of a partnership with two partners, at least one partner shall be a resident in Sri Lanka)  A company incorporated in Sri Lanka.  A company incorporated outside Sri Lanka which is registered as an overseas company under the Companies Act No 7 of 2007  State Institutions with the recommendation of the Secretary to the relevant line Ministry or appropriate Authority.  A person authorized to carry on business as a shipping agent or a general sales agent in Sri Lanka on behalf of a foreign shipping line or airline (foreign principal) with a valid license or authorization letter issued by the Director General of Merchant Shipping and Director General of Civil Aviation Authority of Sri Lanka, respectively  Documents required to open an account  National Identity Card (NIC) / Passport / Driving License (DL)  Birth Certificate  Work Permit (Visa)  Employment Contract  Inward Investment Account (IIA) IIA is a special account designated for eligible investor’s resident in or outside Sri Lanka to route funds to invest in the permitted investments. The currency, in which the account maintained, can be converted to any other designated currency at the discretion of the account holder. All existing Securities Investment Accounts (SIAs) and Special Foreign Investment Deposit Accounts (SFIDAs) are opened and maintained under the provisions of the repealed Exchange Control Act is now known as Inward Investment Accounts (IIAs). In a simple terms, an inward investment involves an external or foreign entity / individual either investing in or purchasing the goods of a local economy. It is foreign money that comes into the domestic economy.  Eligibility criteria to open an IIA in Sri Lanka  A non- national, resident in or outside Sri Lanka  A Sri Lankan dual citizen, resident in or outside Sri Lanka  Sri Lankan national who has obtained Permanent Residency (PR) status or citizenship in another country, resident in or outside Sri Lanka  A Sri Lankan citizen employed abroad, resident outside Sri Lanka (excluding emigrants)  A company incorporated outside Sri Lanka  A partnership registered outside Sri Lanka  Country funds, Regional Funds, Mutual Funds, Unit Trusts and Foreign Institutional Investors established outside Sri Lanka  An administrator or executor of the estate of a deceased person, who maintained an IIA with the bank  A receiver or liquidator of a company that maintained an IIA with the bank  Outward Investment Account (OIA) An OIA is a special account designated to channel funds abroad for eligible overseas investments such as investment in Shares, Units, Debt Securities, Sovereign Bonds and establishing an overseas arm of a company incorporated in Sri Lanka.  Eligibility criteria to open an OIA in Sri Lanka & the Annual limits for the transactions  A company listed in the Colombo Stock Exchange: USD 2,000,000 or an equivalent amount in any foreign currency designated by the Central Bank, per calendar year  A company not listed in the Colombo Stock Exchange: USD 500,000 or an equivalent amount in any foreign currency designated by the Central Bank, per calendar year  A partnership registered in Sri Lanka: USD 300,000 or an equivalent amount in any foreign currency designated by the Central Bank, for life time.  An individual: USD 200,000 or an equivalent amount in any foreign currency designated by the Central Bank, for life time.   A company or a partnership: USD 300,000 or an equivalent amount in any foreign currency designated by the Central Bank, per calendar year.  LKR normal term investment account A Term Investment is a tenured investment account with a specific amount invested at an agreed PSR rate and tenure. At the end of the agreed period (tenure), and based on the customer instructions, the investment can either be re-invested or returned to the account with the profit amount earned. Term Investments are considered one of the safest investment options available due to their low-risk nature.  Sri Lankan citizen over 18 years of age are eligible to open the Term Investment Accounts  Profits will be credited monthly / maturity at a pre agreed ratio  Accounts can be open individually or jointly  Minimum initial deposit is LKR 25,000.00  The PSR for the monthly & maturity type accounts shown below Monthly Profit Maturity Profit Account Type Client Bank Account Type Client Bank 3 months 55% 45% 3 months 55% 45% 6 months 60% 40% 6 months 60% 40% 12 months 60% 40% 12 months 65% 35% 24 months 70% 30% 24 months 80% 20% 36 months 80% 20% 36 months 85% 15% 60 months 85% 15% 60 months 90% 10%  Premature Upliftment Profit Payable pattern for Normal Term Investment is shown below Upliftment Period Profits Payable period TI uplifted before 3 months Savings Account Rate TI uplifted between 3 to 6 3 months TI rate months TI uplifted between 6 to 12 6 months TI rate months Above 12 months 12 months TI rate   The customer will receive a Term Investment Certificate upon the account creation  The customer will be able request for balance confirmation when required (Charges Applicable)  Availability of automated renewal option; if the customer is not willing to renew, the customer may instruct the branch to disable the renewal option in the account  If the customer require to close the account, he/she should visit the account holding branch to close the accounts accordingly.  If the customer unable to visit the Account Holding branch, the CSR mat request them to visit any nearest branch to make the Upliftment request  Customer can also request to uplift the term investment through MSB option through Internet Banking.  Documents required to open an account  NIC / Passport / Driving License  Address Verification Proof (if the address differ from the NIC)  LKR flexi term investment account The flexi Term Investment accounts, as the name suggests is a term investment which offers flexibility and convenience to customers. It is a combination of a term investment and a recurring/savings account. Like Term investments, the invested capital grows by a pre-decided PSR rate. Certain flexi fixed deposit accounts serve the dual purpose of savings scheme and fixed deposits.  The Flexi Term Investment starts with the Deposit of LKR 100,000.00 for the period of 12 Months  Sri Lankan citizen over 18 years of age are eligible to open the Term Investment Accounts  Profits will be credited only at the monthly basis Account Type Client Bank Flexi Term Investment 75% 25%  Accounts can be open individually or jointly  Profits will be accumulated to the account during the profit calculation.  The profits will be paid as per the Savings Account rate, during the premature Upliftment of the Flexi Term Investment  The customer will receive a Term Investment Certificate upon the account creation   The customer will be able request for balance confirmation when required (Charges Applicable)  Availability of automated renewal option; if the customer is not willing to renew, the customer may instruct the branch to disable the renewal option in the account  In Flexi Term Investment the profits will be payable only in the monthly basis but will be added to the same Flexi Term Investment therefore, withdrawal of profit is possible only at maturity  Funds can be deposited to the Flexi Term Investment through Cash Deposit / Fund Transfers etc.  If the customer require to close the account, he/she should visit the account holding branch to close the accounts accordingly.  If the customer unable to visit the Account Holding branch, the CSR mat request them to visit any nearest branch to make the Upliftment request.  Customer can also request to uplift the term investment through MSB option through Internet Banking.  Documents required to open an account  NIC / Passport / Driving License  Address Verification Proof (if the address differ from the NIC)  FCY normal term investment account A Foreign Currency Term Investment is an investment instrument in which a specific sum of money that is poised to earn profits is deposited into a bank. A foreign currency fixed deposit is a fixed-income investment for keeping foreign currency. Money in an FCY Term Investment accounts can’t be withdrawn until the term is up.  The FCY Term Investment starts with the Deposit of USD 500 or equivalent to other currencies for the period of 3, 6 and 12 months  Eligibility criteria to open the account  Individuals including minors who are Sri Lankan nationals.  Individuals of Sri Lankan origin including minors who are resident outside Sri Lanka.  Foreign Nationals residing in Sri Lanka.  Foreign Nationals either on temporary visit to Sri Lanka or intending to visit Sri Lanka.  Minor Savings Accounts  Profits will be credited monthly / maturity at a pre agreed ratio  The profit will be credited to the customer’s savings account under the same currency in the Term Investment.  Accounts can be open individually or jointly  Availability of automated renewal option; if the customer is not willing to renew, the customer may instruct the branch to disable the renewal option in the account  The required documents to open the FCY Normal Term Investment are same as PFCA account opening documents.  FCY flexi term investment account FCY Flexi Term Investment account is the combination of the Savings Account and a Term Investment Account which helps the customer’s to manage their savings wisely and conveniently.  The FCY Term Investment starts with the Deposit of USD 1000 or equivalent to other currencies for the period of 12 months  Eligibility criteria to open the account  Individuals including minors who are Sri Lankan nationals.  Individuals of Sri Lankan origin including minors who are resident outside Sri Lanka.  Foreign Nationals residing in Sri Lanka.  Foreign Nationals either on temporary visit to Sri Lanka or intending to visit Sri Lanka.  Minor Savings Accounts  Customer has the authority to decide whether the profits should be credited to the Savings Accounts or in the same Flexi Term Investment  The profit will be credited to the customer’s savings account under the same currency in the Term Investment.  Accounts can be open individually or jointly  Availability of automated renewal option; if the customer is not willing to renew, the customer may instruct the branch to disable the renewal option in the account  The required documents to open the FCY Normal Term Investment are same as PFCA account opening documents  My future term investment for Children This is a product which is designed exclusively for Children’s segment for parents who want to secure their children's financial future with a bulk investment. The product also offers the ability to deposit funds anytime, similar to a Flexi Term investment product.  The My Future Term Investment starts with the Deposit of LKR 50,000.00   Funds can be deposited to the My Future Term Investment through Cash Deposit / Fund Transfers / Standing Order from a Third Party or Guardian account etc.  Fund Transfer is possible through Same CIF Minor Savings Account subject to meeting the criteria as agreed by Branch Manager  The term investment will be mature only when the minor reaches 18 years  The profit will be credited on monthly basis to the same investment account  The branch will transfer the profit to the normal Children Savings Account upon the request made by the Guardian  The branch recommend the customer to create the account with new funds only.  If the customer requests to transfer the funds from existing Minor Savings Account, same can be considered based on Branch Manager discretion, subject to existing Minor Savings Account maintains the minimum balance of LKR 250,000.00  Fund withdrawal will be allowed when the minor reaches 18 years by transferring to transactional account under the same CIF (upon the Minor account conversion)  If the customer requests a pre-mature termination of the Term Investment due to the unavoidable reasons, the rate will be applicable as below;  If the Term Investment account tenor is reached more than a year, prevailing 1 year normal term investment rate will be applied  If the Term Investment tenor is less than 1 year, the rate will be decided based on existing Pre-mature cancellation procedures by the branch  If the existing guardian wasn’t available, the new guardian has to visit the branch to update the new guardian details by submitting the documents such as NIC & Address verification proof if available  Except for Account opening mandate, the other documents are not required to open this particular account since the account holder already should maintain a Minor Savings Account with the bank.  Eligibility for My future term investment  Any Minor Savings Account holders subject to maximum age limit being 17 years  Customer should have a Minor Savings Account with an active standing order  Senior Citizen Term Investment account This is a product which is designed exclusively for senior citizen customers and the profits will be shared based on the below ratio: Account Type Client Bank Senior Citizen Term Investment 65% 35%  Features of the product:  Initial deposit would be LKR 25,000.00  Customers must be aged above 55 years.  The profits will be distributed monthly to the senior citizen savings account.  Appointment of nominee is a must while opening this account.  The required documents to open the senior citizen term investment are same as normal term investment account opening documents. 4. Amana Savings Plan (ASP) Amana Bank Savings Plan is a unique saving scheme which allows the customer to reach a target savings amount by a desired time period, helping the customer to develop the discipline of saving for the future. This product is a combination of a normal savings account and ASP investment account.  The customer requires to have a Savings Account to open / operate an ASP accounts  The monthly installment will be transferred to ASP accounts via a Standing Order facility from the Savings Account on every month  Monthly commitment / Installment amount will be deposited by the customer to the savings account  No direct deposits or withdrawals are allowed to the ASP investment account  The account can be opened only as an individual accounts and not as joint account, but appointment of a nominee is a must for this product  Bank will provide an offer letter at the customer at the time of opening the account  The monthly commitment will hit the investment account 5th of each month and the Manual fund transfers are permitted only from transactional savings account  Statements are issued on quarterly basis and no ATM card will be issued to the ASP Account  Free Takaful life and permanent disability cover for the maximum value of 1MN will provide more security on the investment  The insurance cover will commence from the consecutive month after the 3rd monthly installment and will be inactive even if 1 monthly installment is due. (Cover will be active only when installments are regular)  Takaful cover is valid only up to age of 65 years and the maximum age at which a customer can enlist for this product while enjoying the free Takaful cover is 64 years  However, the eligibility and claim values will be subject to the declarations and conditions by the insurance company   If the customer fails to make the first installment, a letter notification will be sent to the customer’s correspondence address requesting the customer to make the installment payment.  If the customer fails to make the second payment, again letter notification will be sent to the customer’s correspondence address requesting the customer to make the installment payment for both current & previous months as well  On the failure of third installment, the account will be terminated by the branch and a letter will be sent to the customer’s correspondence address informing on the ASP account termination.  The available funds will be transferred to customer’s Savings Account upon the termination of ASP account. Target Savings 1 year 2 years 3 years 4 years 5 years Amount LKR 100,000.00 LKR 8,333.33 LKR 4,166.67 LKR 2,777.78 LKR 2,083.33 LKR 1,666.67 LKR 200,000.00 LKR 16,666.67 LKR 8,333.33 LKR 5,555.56 LKR 4,166.67 LKR 3,333.33 LKR 300,000.00 LKR 25,000.00 LKR 12,500.00 LKR 8,333.33 LKR 6,250.00 LKR 5,000.00 LKR 400,000.00 LKR 33,333.33 LKR 16,666.67 LKR 11,111.11 LKR 8,333.33 LKR 6,666.67 LKR 500,000.00 LKR 41,666.67 LKR 20,833.33 LKR 13,888.89 LKR 10,416.67 LKR 8,333.33 LKR 600,000.00 LKR 50,000.00 LKR 25,000.00 LKR 16,666.67 LKR 12,500.00 LKR 10,000.00 LKR 750,000.00 LKR 62,500.00 LKR 31,250.00 LKR 20,833.33 LKR 15,625.00 LKR 12,500.00 LKR 1,000,000.00 LKR 83,333.33 LKR 41,666.67 LKR 27,777.78 LKR 20,833.33 LKR 16,666.67 LKR LKR 1,500,000.00 LKR 62,500.00 LKR 41,666.67 LKR 31,250.00 LKR 25,000.00 125,000.00 LKR LKR 2,000,000.00 LKR 83,333.33 LKR 55,555.56 LKR 41,666.67 LKR 33,333.33 166,666.67 LKR LKR LKR 2,500,000.00 L,KR 69444.44 LKR 52,083.33 LKR 41,666.67 208,333.33 104,166.67 LKR LKR LKR 3,000,000.00 LKR 83,333.33 LKR 62,500.00 LKR 50,000.00 250,000.00 125,000.00 LKR LKR LKR 3,500,000.00 LKR 97,222.22 LKR 72,916.67 LKR 58,333.33 291,666.67 145,833.33 LKR LKR LKR LKR 4,000,000.00 LKR 83,333.33 LKR 66,666.67 333,333.33 166,666.67 111,111.11 LKR LKR LKR LKR LKR 5,000,000.00 LKR 83,333.33 416,666.67 208,333.33 138,888.89 104,166.67 5. Current Account – Qard Current accounts of Amana Bank operates on the Sharia principle of Qard (Loan). Qard is a loan given to the Bank by the customer, where the customer will not be returned anything in excess except the capital. Under this product, the customer is the lender of the money and the bank is the borrower of funds deposited by the customer where the customer will be repaid only the principle amount. According to the principle, the bank may utilize the funds and takes full responsibility of the principle amount. The bank allows the customers to manage the account with multiple number of deposits & withdrawals and may draw the cheque within the available balance. Bank at its full discretion may consider a benevolent loan in case of temporary overdraws by the customer. Further, a Current Account allows you to deposit and withdraw money at any point in time. As opposed to a Savings Account, you can use your Current Account as many times as you need to, in a single day.  Customers, who are Sri Lankan above the age of 18 can open the Normal & Ladies Current Accounts  The initial deposit for the personal current account is LKR 10,000.00  The initial deposit for the SME - Business current account is LKR 25,000.00  The initial deposit for the Corporate - Business current account is LKR 50,000.00  Customers can open the accounts individually or jointly  If the account type is “personal current”, the account can be opened under the customer’s name  If the account type is “SME - Business or Corporate - Business”, the account can be opened under the business name where the business has to be registered  The mode of statement and the periodicity can be chosen by the customers (Physical or E-Statement)  The charges are free for E-Statements  If the customer account closed by the branch due to the bad conduct (3 cheque returns due to insufficient funds, etc.) or by the customer request, there will be a charge of LKR 1,000.00  The current account holders are required to maintain the Minimum balance in the account categorized as; o Personal Current Account : LKR 5,000.00 o SME - Business Account : LKR 15,000 o Corporate - Business Account : LKR 25,000  Customer will have the following facility when opening a current o Personalized Cheque book o Weekly / Monthly / Quarterly Statements o E-Statement facility  o VISA Debit Card with SMS alerts o Standing Instruction facility o Sweep in Sweep out facility (Upon customer request) The balances in the Current account will be transferred automatically by means of auto sweep out facility to savings accounts on a daily basis, whenever there are surplus funds in the account. A sweep in facility is exactly the opposite of a sweep out facility. If there is a deficit in the current account, the deficit amount is transferred from the savings account to the current account.  Documents to open a personal current account  NIC / Passport / Driving License  Address Verification Proof (if the address differ from the NIC)  An introducer (An existing Amana bank current account holder) / Based on the recommendation of the branch manager  Documents to open a business current account  NIC / Passport / Driving License  Address Verification Proof (if the address differ from the NIC)  An introducer (An existing Amana bank current account holder) / Based on the recommendation of the branch manager  BRC - Business Registration Certificate  Identification details of the Proprietor / Partner  Business Related Documents  Cheque Cheque is an instrument in written containing an unconditional order, address to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument. The cheque will move from the deposit bank to the drawing bank as part of the cheque clearing process. The process starts when a cheque is deposited to a bank. The bank will then set about contacting the drawing bank. The cheque is cleared when the depositing bank has received the cheque and funds from the drawing bank. Inward clearing is the process where Instruments or Cheque are received at the branch for the payment to debit the customers’ accounts. The bank verifies whether the Cheque is drawn properly and the properly drawn Cheque will be debited from the respective accounts of the customers subjected to the availability of funds in the accounts. Outward clearing is the process where Instruments or Cheque are sent for the collection to other Banks or Branches and Bank prepares the total sum of the claim to individual banks and summary of the total claim made the particular bank. Next day the presenting bank will receive the status from the respective banks. In case of return, the original instrument along with the reason for rejection is received. Usually, it takes up to two business days for a deposited cheque to fully clear. If the customer deposited the Amana Bank cheque at the cash counter, the cheque will present to the account on the same day and if it is a Non Amana Bank cheque, the process will take a day to present to the account. Amana bank cheque deposit:  If the customer deposited the Amana Bank cheque through the onsite SBC before 2 pm, the cheque will be presented to the customer’s account on the same day.  If the deposit was made after 2 pm, on the next day the customer will receive the cheque to the account.  If the customer deposited the Amana Bank cheque through the offsite SBC before 12 pm, the cheque will be presented to the customer’s account on the same day.  if the deposit was made after 12 pm, on the next day the customer will receive the cheque to the account. Non Amana bank cheque deposit:  If the customer deposited the Non Amana Bank cheque through the onsite SBC before 2 pm, the cheque will be presented to the customer’s account on the next day  If the deposit was made after 2 pm, on the next day after (2 days) the customer will receive the cheque to the account  If the customer deposited the Non Amana Bank cheque through the offsite SBC before 12 pm, the cheque will be presented to the customer’s account on the next day  If the deposit was made after 12 pm, on the next day after (2 days) the customer will receive the cheque to the account.  Types of Cheques  Open Cheque: If the word CASH mentioned in the Cheque instead of the Bearer Name anyone can En cash the Cheque over the counter or Deposit to the savings account  Bearer Cheque: If a Drawer orders the bank to pay a mentioned amount to the Bearer. That is any person who is properly owns a Bearer Cheque is entitled to receive payment of that Cheque   Order Cheque: The word ORDER is written on the face of the Cheque is an Order Cheque. Instances where the Cheque is payable to a person specified therein as the Payee, or to any one else to whom it is endorsed  Bank Cheque: This is a Cheque drawn on the bank it is often used in situations where the payment needs to be transparently secure, for example, the Payment for a large sale item house, vehicle or small assets  Anti-dated Cheque: A Cheque in which the drawer mentions the date prior than the date on which it is presented to the bank. Such a Cheque is valid up to six months from the date of the Cheque drawn (For instance, the Cheque presented on 21st of August 2021 which is dated as 7th July 2021)  Post-dated Cheque: Cheque on which drawer mentions a date which is yet to come (future date) to the date on which it is presented, is called Post-dated Cheque drawn (For instance, the Cheque presented on 21st of August 2021 which is dated as 30th August 2021)  Stale Cheque: If a Cheque is presented for payment after six months from the date of the Cheque is considered as a Stale Cheque. After the expiry period, no payment will be made by banks against that Cheque. A stale Cheque will not honored by the bank  Mutilated Cheque: When a Cheque is torn into two or more pieces and presented for payment. The bank will not make payment against such a Cheque without getting confirmation from the drawer  Crossed Cheque: Crossed Cheque means drawing two parallel lines on the left corner of the Cheque with or without additional words such as Account Payee Only or Not Negotiable. A Crossed Cheque cannot be En Cashed at the cash counter of a bank but it can only be credited to the payee’s account. This is a safer way of transferring money than an Uncrossed or open Cheque. These Crossed Cheque can be deposited only to the Current Account. There are two types of Crossed Cheque and they are: o General Crossing: The drawing up of two simple parallel lines on the face of the Cheque at the top left hand corner with or without the any narration. o Special Crossing: A cheque is deemed to be crossed especially when it bears across its face the name of the banker either with or without the words Not Negotiable. In case of special crossing the payment can only be made to the bank named there in the Cheque  Refusal to pay / returned cheque There are a number of reasons why a bank may refuse to make payment on a Cheque,   Insufficient funds to cover the amount of the Cheque  The Cheque is not completed properly  Discrepancy between the amount of the written sum and the figures  Post-dated and the Cheque is presented before that date  The payer has stopped the Cheque  There is reason to believe the payer does not have the mental capacity to write the Cheque  The payer is subject to a bankruptcy petition Also the customers have the option of stopping the payment of a Cheque. The bank should obtain a request letter stating the Cheque details. The customer is able to share the Request letter through Fax, however the original request letter should be obtain as soon as the fax is received from the customer. Once the cheque is returned, the Cheque Return Notice (CRN) will be available at the cheque deposited branch. The customer can collect the CRN within 3 days from the cheque return date. After passing 3 days, the branch will courier the CRN to the customer’s correspondence address. The CRN contains the reason for the cheque return and have the confirmation on the representable cheque details. There are two types of Cheque Return Notice (CRN) and they are, Representable Cheque & Non Representable Cheque. Below are the reason for the returned representable cheque;  Effects not realized - In Simple words we can understand the word effects not realized means cheque in bank accounts are in the clearing cycle but the fate is still unknown (have not received the fate confirmation from the cheque issuer’s bank)  Payee’s endorsement request - If the payee’s name & other details written in the face of the issued cheque, the particular person has to visit the branch to endorse the cheque.  Payee’s endorsement irregular - This is used when endorsement is not in order, e.g. the spelling of the payee's name as given on the face the cheque differs from the one who visited the branch to en cash it.  Post-dated Cheque - A post-dated cheque is a regular cheque where the writer specifies a future date on the cheque. They do that to ensure the payment is made to the payee on or after the stipulated date. This date can be any future date, depending on the needs of the individual or the company. So, for example, if today's date is 19th June 2020 and the drawer wants to issue a check where they need the payee to receive the amount after a  month, they will put the date as 19th July 2020 where the check can only be cashed or deposited in the bank on and after 19th July 2020.  Payment postponed pending drawer’s confirmation - When the cheque is presented, the bank requires the issuers to confirmation to pay the cheque. In any instance, if the issuer fails to make his / her confirmation the bank will return the cheque as PPPDC  Credit not verified - Credits not verified (Paying Bank) only to be used under catastrophically circumstances where the paying banker faces a situation where the bank is uncertain and unable to verify whether any credits to the customer’s account are available. Below are the reason for the returned non-representable cheque;  Refer to drawer - A cheque on which payment has been refused and which has been returned to the bank on which it was drawn. If the reason is lack of funds, the bank will mark it refer to drawer.  Stale Cheque - This means the bank cannot cash or deposit the cheque until that date has arrived. This is a cheque that is still uncashed more than 6 months after it's written. At this point, it is a stale cheque, and the bank will not cash it.  Account closed - A closed account is any account that has been deactivated or otherwise terminated, either by the customer, custodian or counterparty. In this case, the bank will not pay the cheque  Payment stopped by drawer - A stopped payment is usually requested if the cheque has been declared missing or lost. But many a times the drawer, to escape his debt or liability will also be request to stop the cheque  Drawer deceased - In short, by the death of the drawer, the holder of the cheque will not receive the encashment  Amount in words and figures differ - This is because the written words are the legal amount of the cheque, and the numerical amount is considered a courtesy and is not legally binding.  Drawer’s signature differs from specimen - Not signed in accordance with mandate. This cheque hasn't been signed correctly e.g. the wrong person signed the cheque or the signature does not match with the mandate  Alternation not confirm by drawer - Alteration requires drawer’s authentication - It means there are alterations in your cheque that have not been authenticated  Cheque incomplete - A cheque signed by a drawer of cheque without completing the material particulars such as date, amount or name of the payee, it is known as an inchoate or incomplete cheque.   Cheque crossed to more than one bank - In a cheque , if two bank's names are mentioned or by special crossing , then the paying banker can't pay the amount to any one banker  Cheque irregular drawn - Wrongly delivered. The cheque has been presented to the wrong bank for payment in error, resulting in an unpaid transaction on your account  Validity expired - Technically speaking, cheque don't have an expiry date. But, in practice, banks will usually reject a cheque if you try to pay it in or cash it more than six months from the date of issue - that's the date written on the cheque  Bad image - It means that the image of the cheque that has been received by the cheque issuing bank is not clear  Cheque book status  Current account holder must visit the branch directly to request for a Cheque Book. In case if the customer is unable to visit the branch, he/she can send a request through MSB option. However when the customer requesting for the second time, the previous Cheque Book’s 70% of leaves must be submitted and paid to process a new Cheque book.  Charge for a cheque leaf would be LKR 25.00 and for a new customer initially a cheque book with 10 leaves will be provided and subsequently he/she will be provided with the requested leaves based on their maintenance of the account.  The customer can make the request at any nearest branch, however customer’s request will be forwarded to the Home Branch to process.  Cheque Book Processing Timeline would be 1 working day if the request has been given to home branch or else it might take about 2 to 3 working days and the customers will notify the readiness of the Cheque Book Collection via SMS. Moreover, customer can reach the hotline at any time to confirm Cheque Book Request Status.  The staff could check the Cheque Book Request Status through Imal Core Banking System To check on the cheque book status, the staff will have to select the option “Cheque Book Request” which is available in the left side of the screen. (Image 1) Once the Cheque Book Request option is selected the staff may trace the customer request status with CIF Number entered in the highlighted column (Image 2)  Image 1 Image 2 Upon entering the CIF in the highlighted field, the customer will be able to view the status of the request as shown the image 3. Image 3 Below are the types of status that the agents will receive while reviewing the cheque book status.  Submitted - This status refers on the old cheque books which was already used by the customer  Request send to provider - The cheque book request has sent to the provider  Received from the provider - The cheque book was received to the branch  In branch - The cheque book is available at the branch – The branch where the cheque book is available can be checked through clicking the particular tab twice and the staff’s employee ID will be mentioned.  Stop payment request Generally, stop payments are used in cases when the account holder does not want the cheque to be paid for various reasons. Some of the reasons include stolen or lost cheque, forged cheque, insufficient funds to cover the cheque amount, or a dispute between the depositor and the party that was given the cheque. In order to request for the stop payment process, the customer required to visit the branch and submit a letter. 6. Inquiries pertaining to Products (Assets & Liabilities) As a Bank, Amana offers a number of financing products to its customers in view of assisting them in their needs. There are a wide range of products/facilities offered by the bank to suit customer needs. New or existing customers may require details regarding Deposit / financing products offered by Amana Bank such as the type of facilities they can have, the eligibility criteria, the maximum facility amount, the tenor of the facility etc….  Business Leads on deposits Prospective clients may inquire about accounts that they wish to open in Amãna Bank. Also, existing customers may inquire about accounts that they have not yet opened with us. The Customer Service Representative will provide features/benefits of the product and the eligibility criteria, the minimum balance, the Profit Sharing Ratio and the profit- returns, the documentation requirement to open the account etc. based on customer query. Customer Service Representative may take necessary contact information and detailed requirement of the Customer and inform the same to the nearest Branch of the Customer via email so that Branch may be able to follow up with Prospective/Existing Clients on their new requirement. Also if the customer is an existing CIF holder, wishes to open a Term Investment accounts, the Customer Service Representative will advise the customer to request through IB Message to Banking Option.  Business Leads on facilities Upon receipt of a query from a customer, the Customer Service Representative would provide details based on circulars or by accessing the internal data source containing product/facility details. If the customer requires additional details, the Customer Service Representative will Add/request the customer requirement through the online portal by updating the customer details. The request will direct to Retail Advance or check with the customer for his closest branch and provide the respective CRM’s name and contact number or arrange for a call back from the respective CRM (by sending an email to CRM with customer details).  Queries on details of Existing Facility customers Upon successful verification, Customer Service Representatives would provide information pertaining to outstanding balances, overdue/paid installments & due dates of customer facilities. In the event that a customer wishes to settle a facility before the original final repayment date. Customer will be informed to visit the facility branch or provide the respective CRM’s name and contact number or arrange for a call back from the respective CRM (by sending an email to CRM with customer details).  Management of Data Source and Circulars related to product offerings The bank may offer certain products or services or revise its existing product/service offerings from time to time. These revisions/offerings may be communicated via circulars, product papers and or direct instructions etc. from relevant departments. Contact Centre Supervisor ensures that the information received is updated on the data source and reflects present product offerings or practices and same is being reviewed by the Manager Contact Centre. 7. Islamic Financing Islamic finance could help increase access to financial services of underserved groups who have abstained from conventional banking practices or conventional instruments for religious purposes. In particular, Islamic law prohibits the collection and payment of interest. Generally, it also prohibits trading in financial risk (seen as a form of gambling). It also prohibits investing in businesses considered haram (prohibited, forbidden), such as those selling alcohol or pork.  Islamic rule of contract  The parties who were involved in the sale should be sane & matured  Offer & Acceptance should be done by act, oral or in writing  Asset to be sold must be exist  Sale price should be determined  Sale must be unconditional, instant & absolute  Sale must be pure and in the ownership of the seller at the time of sale  Sale must be useful and physical or constructive possession of the seller  Sale must be determinately known to the buyer & seller  Sale must not be used for an un-Islamic purposes  The item should be valuable, known & specified  Non Eligible customers to obtain any facilities  Minor Employees  Clergy – bikku  Armed Forces  Security personals  Home Financing - Diminishing Musharaka Diminishing Musharaka is a form of partnership in which one of the partners promises to buy the equity share of the other partner gradually. The bank and the client participate in joint ownership of a property / an equipment or a joint commercial enterprise. The share of the bank is divided into a number of units. The client purchases these units one by one periodically until he owns the entire the property. It is a partnership contract where the customer invites Amana Bank to invest jointly with him to purchase a property. Upon the purchase of the asset, the customer and the Bank will be the joint owners of that particular asset. Once the partnership is established the Bank will allow the customer to use its portion against a rental payment. The Bank’s share will be divided into a number of units and it is understood that the customer will purchase the units of the share of the Bank one by one periodically thus increasing his own share until all the units of the Bank are purchased by the customer so as to make him the sole owner of the asset. Each time the customer purchases a unit his ownership increases and that of the Bank decreases, hence the customer’s subsequent rent, after purchase, will be reduced proportionately. Following are the facilities can be obtained through Home Finance facility;  Purchase a Bare Land for Home Construction - finance up to 70% from Force Sale Value (FSV)  Purchase a Completed House/Apartment - finance up to 70% from Force Sale Value (FSV)  Construct/Renovate/Extend your Home on your Own Land - finance up to 70% from Bill of Quantity (BOQ) for construction  Transfer an Existing Home Finance facility to Amana Bank - 100% of loan outstanding subject to above FSV and BOQ criteria where applicable  Refinance the Costs incurred by you in Purchasing or Building your Home - finance up to 70% from Bill of Quantity (BOQ)  Process Flow  Creating joint ownership in the property  Giving the share of the bank to the client on rent  The client purchases these units one by one periodically until he owns the entire property.   At the end of the agreed period customer will own the 100 % of the property  Product related details  Facility amount can be obtained from LKR 500,000.00 to LKR 37,500,000.00 (Higher values will be considered case by case)  Extend of Land considered from 6 perches to 80 perches (Higher values will be considered case by case)  Exceptionally the bank would consider for 5 perches only with the Local Authority Clearance for construction  The customer can obtained the facility maximum up to 20 years for the Purchase / Construction / Renovation  However, the Non Resident will be able to obtained the facility up to 10 years  In case of early settlement, the Bank allows settling the facility early in which case only the capital outstanding and rental due up to settlement date will be recovered  The customer requires to bear the valuation fee, cost of fire Takaful, stamp duty, registration cost etc. because Amana Bank has invested in that subject property upon the customer request and in the customer’s interest as they intends to finally own the whole asset  General documents required  Home finance Application  NIC / Driving License  Relationship proof documents for Joint Applicants if the customer jointly requested facility  Recent Photograph  Property documents required  30 years of certified original extracts from the relevant land registry (not more than one month old)  Last deed & other title deeds for the past 30 years   Last approved survey plan & other survey plans for the past 30 years (please note that the last survey plan should be within 10 years and the sub division approval in mandatory)  Local authority documents from the relevant municipal/UC  Street or Building line certificate | Non-vesting certificate | ownership certificate | assessment notice | tax receipt for the latest quarter - not more than 6 months old  Copy of the approved building plan & certificate of conformity (COC) - Not applicable for land purchases  Bill of quantities (BOQ) |estimate certified by a chartered architect | civil engineer | quantity survey  Draft deed of transfer - for purchase cases only  Confirmation of the Grama Niladhari division and divisional secretariat of the property to be mortgaged  Sketch to the property from the nearest town  Income documents required for self employed  Copy of the BR and other company registration documents  Last 6 months bank statements company or personal  Last 3 years audited accounts  Last 3 years tax returns & receipts  Income documents required for salaried applicant  Copy of the valid PP VISA, work permit & resident permit (If the customer is residing overseas)  Copy of the current work contract / appointment letter  Original letter from the employer confirming the monthly basic salary & allowances, current designation number of years in service retirement age & the type of employment  Salary slips for the past 6 months  Last 6 months bank statement of the salary account  Power of attorney as per bank format - if required  Working Capital Diminishing Musharaka In case if a customer required cash facility for an unavoidable situation, the bank tries to assist the customer with the facilities available at the branch. However if the bank unable to fulfil customer’s need with the existing facility, the bank would request the customer to hold any of his or her property to the bank as a security and will provide the cash facility maximum up to 70% from the value of the property to the customer. Since this facility is a capital based financing, the first one year would be grace period given by the bank to customers, where the customer requires to make only the rental payment as per the Sri Lankan Sharia policy, as the asset cannot be resell to the same owner within the year. The tenure will be decided by the relevant branch after 1 year of the grace period and if the customer would like to go for an early settlement, he or she can use that option as well. However, the facility rate will be decided on the asset purchased by the bank from the customer. For example, if the customer sold a unit from his or her house, then the rate will be captured under the home finance facility. Working Capital Diminishing Musharaka is provided by investing into an asset already in the ownership of the client. Working Capital Diminishing Musharaka is provided for facilitating the following;  House Construction  Provide Working Capital for business activities  Settling existing debts  Documents required  Working Capital Diminishing Musharaka Application  Letter of Offer  Property Purchase  Acceptance  Letter of Promise to Purchase Undivided Shares of Amana Bank  Deed of Lease  Letter of Offer to Purchase Units of Undivided Share of Property Owned by Amana Bank  Vehicle Financing – Ijara The asset selected by the customer will be financed by the bank for an agreed period and upon the successful settlement, the customer will receive the asset as a gift from the bank. Ijara in simple terms, implies leasing or hiring of a physical asset. It is a popular debt- based product in which the Islamic bank assumes the role of the bank (lessor) and allows its client to use a particular asset that it owns. The client (lessee) is in need of the asset. Through Ijara, it receives the benefits associated with ownership of the asset against payment of predetermined rentals. At the end of the Ijara period the Ijara asset would be gifted to the Lessee on unilateral “Promise to gift”. There is no doubt that the Bank has acquired the subject asset upon customer’s request who wants to own the asset. Therefore, the Bank has acquired the asset and rented it out to him against a monthly rental and given an undertaking to gift (Hiba) the same asset upon his fulfillment of the terms & conditions of the Lease Agreement. At the end of the tenure, the subject asset will be transferred to the customer by executing a Hiba contract. It is allowed for the early settlement in Ijara Facility. In this case the customer may or may not be given a discount because he has undertaken to pay monthly rentals. Now if he comes to settle early i.e. he has broken a binding promise thereby terminating the Ijara contract. Once the contract is terminated, the Bank (as absolute owner of the asset) can sell the subject asset at a price fixed by the bank and negotiated with the customer. The customer (lessee) cannot sell the leased property while the absolute ownership belongs to the Bank (lessor). But if the Bank grants its consent then the customer shall purchase the asset from Amana Bank first and sell it subsequently to whoever he wishes to sell. The customer approaches the company with the request for financing and enters into a promise to lease agreement. The company purchases the item required for leasing and receives title of ownership from the vendor and the company makes payment to the vendor. The company leases the asset to the customer after execution of lease agreement (Ijara Agreement), then onwards the customer makes periodic payments as per the contract. Upon receipt of full contractual obligations by the client, the title will be transferred to the customer as a best practice (Promise to Gift) Client identifies and approaches Vendor or supplier of the asset that he/she needs, collects all relevant information. Client approaches Bank for Ijara of the asset and promises to take the asset on lease from the Bank upon purchase & the bank makes payment of price to Vendor.  Vendor transfers ownership of asset to Bank and the bank leases the asset, transfers possession and right of specified use to Client. Client pays Ijara rentals over future (known) time period(s). Finally asset is gifted to the client at the end of the Ijara period on a unilateral promise (Promise to gift). Rentals will be due only upon commencement of usage of the asset. Rentals will be charged only if the asset is in working condition (Terms and conditions Apply).  Difference between Conventional Bank Leasing & Ijara Islamic Financing Conventional Leasing Ijara The leased asset is not owned by the bank The leased asset is owned by the bank The bank is not responsible for any loss to The bank bears all the risks of loss of asset if the asset such loss is not caused by customer negligence Rent is charged and demanded prior to the No rent is charged or demanded prior to the delivery of the asset delivery of the asset Penalty on late payment is charged and Penalty on late payment cannot be charged (if taken as an income ‘collected’, it is to be donated to charity) The conventional lease agreements give Since Ijara is a binding agreement, neither party unilateral rights to a bank to terminate the can terminate it without mutual consent, unless lease agreement without any reason there is a breach of contract by either party Insurance should be at the expense of the The insurance is independent of the lease Lessor. The Lessor may increase the rental contract. The insurance expense of the asset charges to recover the any cost incurred by him is directly borne by the Lessee in connection with the asset.  Termination of Ijara If the lessee (the customer) breaches any term of the agreement, the lessor (the bank) has the right to terminate the Ijara contract unilaterally. However, if there is no breach on the part of the lessee, the Ijara cannot be terminated without mutual consent. Conventional financial leases at times provide for an option for the lessor to terminate the lease unilaterally. Ijara on the other hand, allows for stipulating an option for either or both the parties to confirm or rescind the contract. Such stipulated option is valid for a specified option period under the framework of al- khiyar. If the termination has been affected due to the misuse or negligence on the part of the lessee, he may also be asked to compensate the lessor for the loss caused by such misuse or negligence.  Bank’s Contribution of the Ijara Products  Vehicle Type Category Bank's contribution % Unregistered 50% Four Wheelers Non Hybrid Registered after 1 year 70% Unregistered 50% Four Wheelers Hybrid Registered after 1 year 70% Unregistered - Petrol 70% Two Wheelers (Bike) Unregistered - Electric 90% Unregistered - Petrol 25% Three Wheelers Unregistered - Electric 90% Commercial Vehicle (Lorry / Tractor) 90%  General documents required  NIC / Passport / Driving License  Recent Photograph  Relationship proof documents for Joint Applicants  Ijara finance Application  Documents required for salaried applicants  Evidence of current salary (pay slips) or other earnings  Performa invoice \quotation for asset from the supplier or agent \ valuation report  Bank statements for the past 6 months  Documents required for self-employer  BRC for business entities  Bank statements for the past 6 months  Audited financials and tax returns for the past 3 years (if applicable)  Performa invoice \quotation for asset from the supplier or agent \ valuation report  Sale and lease back - Ijara Refinancing In a sale-and-lease-back arrangement the customer may sell an asset that it owns, to the bank for a price and then take it back on lease. The result is an immediate cash inflow for the customer (in the form of sale price of the asset). The customer continues to use the asset in lieu of periodic Ijara rentals paid to the bank, which now owns the asset. Customer sells an asset it owns to Bank on cash basis; (Possession of the asset remains with the Customer while ownership papers are transferred to the Bank). Customer enters into an Ijara contract with Bank for the same asset; Customer pays known rentals over future (known) time period. Bank transfers ownership of asset to customer at the end of Ijara period either through gift or sale. Customer cannot purchase back within one year and the repurchase would only commence after one year grace period to avoid buy back.  Educational Financing – Service Ijara The bank will buy the required package from the selected service provider (the customer intends to study) and then lease the same to the customer for a fee. Ijara may be in the form of financing for the services rendered by the service provider. These services are offered in exchange for consideration in the form of fee payments. These include services rendered such as educational services, health services and tourism services. Ijara is a lease contract, where the bank (the lessor) leases to a customer (the lessee) a specific service which would come into existence in the future, such as education, for a specific period of time with specific regular instalments. Education Finance Product operates under the Sharia principle of Ijara al- Khadamat”. Employing the services of a person / Hiring of a person. Ijarah may be in the form of financing for the services rendered by the service provider. For Educational Facility, the Bank Finance maximum up to 80% from the course fee.  General documents required  Detailed invoice from the educational institute  Recent Photograph  NIC / Passport / Driving License  Educational finance Application  Documents required for salaried applicants  Salary assignment letter  3 months’ salary slip / Bank statement  Proof of employment  Documents required for self-employer  BRC for business entities  Bank statements for the past 6 months  Audited financials and tax returns for the past 2 years (if applicable)  Tax payment receipt  Eligible criteria to obtain the facility  Employees of CSE listed, Reputed company list, Government servants, self- employed personal and professionals  If the student is unemployed, facility should be applied with the parent with source of income  All courses offered by the universities & institutes accredited by the University Grants Commission (UGC) of Sri Lanka  Sri Lankan citizens aged between 18 to 55  Process Flow of Educational Financing  Application Personal Credit Facilities / Quotation From the Institute  Letter of Agreement with the Education Institute/MOU  Facility Offer Letter  Letter of Promise to Obtain Education Services  Letter of Offer and Acceptance  Service Confirmation Order  Acceptance Receipt  General Details of Educational Financing  Customer can obtained the facility for minimum of LKR 50,000.00 and maximum of LKR 5,000,000.00  Only 500,000.00 can be provided by the Bank for the courses which are not approved by University Grants Commission (UGC) of Sri Lanka  Facility can be obtained from 6 months to 60 months  If the customer requests for the Facility Amount up to LKR 700,000.00, One Guarantor required to obtain the Facility  If the customer requests for the Facility Amount above LKR 700,000.00, A movable or An immovable property required to obtain the Facility  The customer can obtained the facility for the new courses.  The customer can also request for the ongoing courses but the ongoing course fee for the particular subjects should not be partially paid and this is based on the RM’s confirmation.  The facility is available for Overseas Universities as well   Travel Financing – Service Ijara The bank will buy the required package from the selected service provider (the customer intends to travel) and then lease the same to the customer for a fee. Ijara may be in the form of financing for the services rendered by the service provider. These services are offered in exchange for consideration in the form of fee payments. These include services rendered such as educational services, health services and tourism services. Ijara is a lease contract, where the bank (the lessor) leases to a customer (the lessee) a specific service which would come into existence in the future. The service will be provided by a service provider, such as Hajj and Umrah tour operators, through a signed parallel lease contract on the same described service for the same period in exchange for the agreed rental. This product operates under the Sharia Principle of “Ijara Al Khadamat”. The product could also be offered under “Murabaha” concept also. The Purpose of the Travel Finance is to finance Hajj & Umrah travel expenses and the all general travel requirements. Under this product Amana Bank will acquire the package from the service provider and will offer the package to the customer with the profit. This facility could be offered to business travelers and leisure travelers as well. For travel finance, it will be offered as a package to the customer consisting with the tour package  Process Flow of Travel Financing  Customer will approach the bank for a Hajj or Umrah or any other travel financing facility  Customer will submit an Application Form/promise to lease whereby the Customer will request the bank to finance their travel and will promise to lease the Services from the bank once the bank has purchased the Services from the Service Provider  The bank will issue a Services Confirmation Order addressed to the Service Provider whereby the bank will offer to purchase the Services from the Service Provider  If the Service Provider accepts the offer (which acceptance will form an agreement between ABL and the Service Provider) the Service Provider will issue the invoice in the name of the bank upon which the bank will make the payment directly to the Service Provider   Once the bank has purchased the Services from the Service Provider, the bank will enter into a Lease Agreement whereby the bank will lease the Services to the Customer in consideration of Lease Rental to be paid to the bank by the Customer as agreed between the bank as the lessor and the Customer as the lessee  The Lease Rental can be paid in easy instalments by the Customer as agreed between the bank and the Customer  General documents required  Detailed invoice from the travel agency  Recent Photograph  NIC / Passport / Driving License  Travel finance Application  Documents required for salaried applicants  Salary assignment letter  3 months’ salary slip / Bank statement  Proof of employment  Documents required for self-employer  BRC for business entities  Bank statements for the past 6 months  Audited financials and tax returns for the past 2 years (if applicable)  Tax payment receipt  General details of travel financing  Generally for 12-18 months. Could be considered for longer tenures based on the requirement of the customer.  The person(s)/joint applicants who wish to engage in the pilgrimage or A group of Pilgrims who wish to engage in the pilgrimage  For Umrah Pilgrimage, the Personal Guarantees of two people acceptable to the Bank and/or Third Party Guarantee acceptable to the Bank  For Hajj Pilgrimage, Personal Guarantees of two people acceptable to the Bank or Third Party Guarantee acceptable to the Bank  For Hajj Pilgrimage, above LKR 250,000 Primary/Secondary mortgage of a property acceptable to the Bank   Small Asset financing (Extended Murabaha | Easy Payment Plan) Murabaha is the Sale of Goods at Cost Plus on pre-agreed Profit markup. Thus, Murabaha is not a loan given on interest; it is a sale of a commodity for cash/deferred price. A simple Murabaha is one where there is cash payment and Murabaha Muajjal is one on deferred payment basis. The client and the institution signs an overall agreement whereby the institution promises to sell and the client promises to buy the commodity from time to time on an agreed ratio of profit added to the cost. This agreement may specify the limit up-to which the facility may be availed. An agency agreement is signed by both parties in which the institution appoints the client as his agent for purchasing the commodity on its behalf. The client purchases the commodity on behalf of the institution and takes possession as the agent of t