Islamic Banking – Key Differences of Components Within a Financial Statements of an Islamic Bank

Let us look at the key differences in presentation of financial statements between conventional an Islamic banking.

Statement of Financial Position (Balance Sheet)

In conventional accounting, the balance sheet has these few components, namely assets, liabilities and owners’ equity. In Islamic banking, there is one additional component called “equity of unrestricted investment account holders”.

In conventional banking, an asset is defined as an item with future economic benefit attached to it regardless whether there is legal control by the reporting bank. For Islamic banking, however, an item can be taken as an asset only when the Islamic bank has legal right to hold, use or dispose of the item.

The other unique feature is the “equity of unrestricted investment account holders“. This additional component is to satisfy the set of customers who invest on the basis of mudarabah which calls for any losses to be borne by the investors (the customers themselves). It is therefore, important to disclose sufficient information to demonstrate the measures taken by the bank to ensure that the interests of this set of customers are considered as part of the strategy of the bank. In conventional banking, they will be treated as liabilities instead.

There are 2 forms of mudarabah contracts:-

  1. Mudarabah Mutlaqah – This is the “unrestricted” mudarabah contract whereby the capital provider/owner allows total freedom to the bank to use the capital for its projects without conditions, specifications, restrictions or limits. The bank is free to enter into any trade agreements, whether normal or deferred or leasing basis, using the owners’ capital. This form of mudarabah is typically used in replacement of the conventional fixed deposit product for retail customers.
  2. Mudarabah Muqqayadah – This is the “restricted” mudarabah contract. The bank is given certain parameters (restrictions and conditions) on how to use the capital provided by the owners.

Statement of Changes in Restricted Investments and Their Equivalent

This is the statement to report the use of mudarabah muqqayadah investments whereby the bank is to undertake to use the funds for specific investments. This pool of fund must be separated from other funds as the returns from this fund will be shared among this particular group of investors.

Apart from the returns or losses for the group of restricted investors, the statement should also report profits or losses before deducting the investment manager’s share of investment profits/losses. The bank’s share of compensation as the investment agent is also known as mudarib.

Statement of Sources and Uses of Zakat and Charity Fund

This is required only when the bank established a zakat and charity fund whereby the bank acts as a fiduciary of that fund. The bank is responsible for collection and distribution of all or part of zakat and charity funds.


All About Bank Teller Jobs and Work Profile

Many of us enjoy professions that are connected with financial and accounting subjects such as an accountant or a bank teller. Bank teller is the person who records the daily routine bank transactions and tallies the balance amount at the end of each working day of the bank. He/she also processes the deposits of account holders and pays funds as required by the account holders. Such jobs are required by every other bank in any corner of the world. Individuals interested in such a profession can scour online education mediums for diploma courses in banking.

Bank Teller Job Profile:

o Receiving cash or check from various account holders or customers as deposit

o Verifying the pay amount and check endorsements

o Examining the cash given by the customers so as to prevent any money fraud

o Giving out cash to customers against their check deposits, but after closely verifying the signature and account balance of the customers

o Feeding each and every bank transaction into the computer and providing printed receipts to the account holders

o Counting cash balance in the teller deposit container at the beginning and end of every working day. (in relation with the banking transaction that takes place every day)

o Preparing certified checks, traveler’s checks, cashier’s checks, bonds, etc according to the bank rules

o Explaining all the banking procedures and services to new customers

o Substituting other customer service executives if needed

o Helping customers open bank accounts, getting access to deposit lockers and understating ATM operations correctly.

More about Teller Jobs:

Though bank teller jobs may seem to be mundane and boring; it is a very important profession that needs the person to be highly efficient and accurate in his/her account dealings. Nowadays, due to the automatic teller machines (ATM), the teller’s workload has decreased considerably.

Qualifications Needed To Become a Bank Teller:

Most of the banks or financial institutions set certain norms for bank teller jobs such as the following:

o Minimum High School qualification

o Good mathematical aptitude

o Excellent communication skills

o Relevant typing speed

o Attending in-house training sessions

o Some basic experience or firsthand knowledge of banking job


Why Do You Need a US Bank Account As a Foreign Resident?

These days everywhere you go online, be it at Forums or at Search engines, a lot of people are asking for a way to set up a US Bank account even when they are not resident there. What could be the reason for this? This is particularly surprising with the war on terror where the US government has put a seal on most of the things from the US. This is the purpose of this article. We want to examine why you as a foreigner or non resident would want to have a US bank account considering that since after the unfortunate 9/11 incident, the US government has tightened her grip on everything financial in the US.

So let us examine the importance of a US bank account and why a foreigner who is online doing business or working would need one. If you are online and trying to earn a living, you need an account over there to receive your payments online from the companies and individuals most of whom are based in the continent of America. You want to get your money fast with little or no extra charge.

With an account in America you would be paid via what they call ACH (automated clearing house) system or direct deposits. This will allow you to get your money within 2-3 working days and mostly without any fee or charge. You get your money 100%.

If you do not have an account there, you are going to be paid by checks which would be cut and mailed to you. This can take anywhere from 8-10 weeks before you can see and be able to draw the actual money in your home country. Compare that with the person with an account over there and you see this does not require any argument. It requires no rocket science or extra knowledge to see what a a US account can do for you online. If you have customers who are in the US, having an account over there will make it easy for them to pay you. This will lead to increase sales and profits.

Another importance of a US bank account is that if you have one, you can easily open and verify a Paypal account. Most Americans prefer to pay someone online using their PayPal account because of the perceived protection that this offers them as buyers online especially in this scam infested era on the internet. Scam is rampant online and the only way to increased sales is to assure people that they are not throwing away their money.

What better way to do this than with a PayPal account?

You can say that you can easily set up a PayPal account without a US bank account. That is true. But remember that for the vast majority, this is not the case. Out of the over 200 countries of the world, PayPal supports just around 67-80 countries. The rest are cut off. So if you do not have a US bank account and you are from the rest of the countries, you are doomed.

But if you have a US bank account, using a US address, you can easily set up a paypal account and verify the same using your US bank account. This way you are not cut off just because you are from a non supported country. The above reason is among the benefits of having a US bank account as a non resident. There are others benefits, but the above are the main ones which make many people online to be looking for a way out.