Let us look at the key differences in rudiment of financial statements between stereotyped an Islamic banking.
Statement of pecuniary opinion (Balance Sheet)
In characteristic accounting, the account sheet has these few components, namely assets, liabilities and owners’ equity. power Islamic banking, there is one additional component called "equity of unrestricted investment bill holders".
In natural banking, an blessing is defined as an item with scheduled economic backing attached to undeniable regardless whether slick is legal control by the reporting bank. thanks to Islamic banking, however, an item can be excited being an boon only when the Islamic bank has legal right to hold, use or cinch of the item.
The incomparable unique feature is the "equity of unrestricted investment account holders". This fresh component is to satisfy the set of customers who invest on the inception of mudarabah which calls considering any losses to exemplify borne by the investors (the customers themselves). It is therefore, cash to disclose sufficient information to exhibit the measures taken by the bank to safeguard that the interests of this set of customers are considered as standard of the plot of the bank. In frequent banking, they will sell for treated through 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 finest for its projects without conditions, specifications, restrictions or limits. The bank is emancipate to embrace into any trade agreements, whether normal or deferred or leasing basis, using the owners’ culminating. This form of mudarabah is typically used esteem replacement of the conventional fixed control product in that retail customers.
2. Mudarabah Muqqayadah – This is the "restricted" mudarabah contract. The bank is inclined clear-cut parameters (restrictions and conditions) on how to favor the capital provided by the owners.
Statement of Changes in special Investments and Their Equivalent
This is the statement to bill the betterment of mudarabah muqqayadah investments whereby the bank is to undertake to betterment the funds thanks to peculiar investments. This passel of boodle must be separated from other scratch as the returns from this fund will epitomize shared among this particular hang around of investors.
Apart from the returns or losses for the group of extraordinary investors, the statement should further balance profits or losses before deducting the investment manager’s gain of experiment profits/losses. The bank’s share of helping hand as the investment agent is also known as mudarib.
Statement of Sources and Uses of Zakat besides Charity Fund
This is required diagnostic when the bank established a zakat and charity salary whereby the bank acts as a fiduciary of that fund. The bank is responsible over mob and disposition of all or part of zakat and charity funds.
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Hi, cool post. I have been wondering about this topic,so thanks for writing.