Malaysia Guidelines on Credit Transactions and Exposures with Connected Parties for Islamic Banks – An Overview and Summary of Requirements

• By: Staff Editor
• Date: May 19, 2013

Islamic banking institutions mobilize a large proportion of their deposits in the form of ‘mudharabah’ (profit-sharing and loss-bearing) contract. Under the mudharabah contract, depositors (also known as Investment Account Holders or IAH) agree to participate in the financial activities undertaken by Islamic banking institutions and share the profit generated from financing and/or investment activities based on an agreed profit-sharing ratio. The assets funded under the mudharabah contract are commonly known as Profit-Sharing Investment Account (PSIA).