1. Principles of distribution of Profit to Mudaraba Depositors
Presented by
Md. Fariduddin Ahmed
Advisor
Export Import Bank of Bangladesh Limited
Former
Managing Director & Chief Executive Officer
Islami Bank Bangladesh Limited

2. Principles of distribution of Profit to Mudaraba Depositors
The principles of calculation and distribution of profit to Mudaraba Depositors generally followed by different Islami Banks are as under:
Mudaraba Depositors share income derived from investment activities i.e. from the use of fund.
Mudaraba Depositors do not share any income derived from miscellaneous banking services where the use of fund is not involved, such as commission, exchange, service charges and other fees realised by the Bank in connection with sale and purchase of Demand Drafts, Telegraphic Transfers and Mail Transfers etc.
Profit and loss resulting from the use of funds are separately maintained in the accounts from other income and expenditure relating to other activities and services offered by the Bank.
Prepared by Forkan Uddin Mahmood

3. Principles of distribution of Profit to Mudaraba Depositors
Mudaraba Deposits get priority in the matters of investment over Bank's equity and other cost free funds.
Mudaraba Depositors do not share any income derived from investing Bank's equity and other cost free fund.
The amount of the statutory cash reserve and the liquidity reserve which are required to be maintained with Bangladesh Bank is deducted from the aggregate balance of Mudaraba Deposits to arrive at the net balance of profit sharing deposit.
The gross income derived from investments during the accounting year is, at first, allocated to Mudaraba Deposits and cost-free-funds according to their proportion in the total investment.
Prepared by Forkan Uddin Mahmood

4. Principles of distribution of Profit to Mudaraba Depositors
The share of gross investment income of Mudaraba Deposits as worked out in terms of principle shown against serial No 7 above is distributed as under:
Minimum sixty-five (65) percent is distributed to Mudaraba Depositors applying the rates of weightage shown below. Mudaraba Depositors' share of sixty-five (65) percent of gross investment income might further be raised by the Bank's Management at its discretion to rationalise the Rates of profit to Mudaraba Depositors but it would not be reduced during any accounting year without giving prior declaration.
The rest amount of gross investment income is retained by the Bank as management fee for managing the investment & for making reserve for Bad & doubtful investments.
Prepared by Forkan Uddin Mahmood

5. Particulars of Deposits
Principles of distribution of Profit to Mudaraba Depositors
Islami Bank Bangladesh Ltd, at present, applies the following weightages to Mudaraba Deposits.
Sl.
Particulars of Deposits
Weightage a)
Mudaraba Hajj Savings i)
From 11 years to 25 years Term
135%
ii)
From 1 year to 10 years Term
130% b)
Mudaraba Waqf Cash Deposit c)
Mudaraba Special Savings (Pension)
10 Years
5 Years
110% d)
Mudaraba Muhor Savings Account
Ii) e)
Mudaraba Savings Bond (MSB)
8 Years
125% f)
Mudaraba Monthly Profit Deposit Scheme (MMPDS)
120% g)
Mudaraba Term Deposits
36 Months
100%
24 Months
98%
iii)
12 Months
96%
iv)
06 Months
92% v)
03 Months
88% h)
Mudaraba Savings Deposit
75%
Mudaraba Foreign Currency Deposit j)
Mudaraba Special Notice Deposit
55%
Prepared by Forkan Uddin Mahmood

6. Principles of distribution of Profit to Mudaraba Depositors
Differential rates of weightages have been assigned to Mudaraba Depositors on account of the following factors:
Banking Facilities
The Term Depositors do not enjoy any banking facility such as, operating accounts by cheques, transfer of account from one branch to another, collection of cheques and other instruments, executing standing instructions through their accounts and so on and so forth. On the other hand, the PLS Savings Depositors have freedom to get the above services through their accounts. PLS Short Notice Depositors enjoy still greater facilities in regard to making deposits in and withdrawal from their accounts.
Prepared by Forkan Uddin Mahmood

7. Principles of distribution of Profit to Mudaraba Depositors
Period of Deposits
The longer the period of deposit, the greater the risk they bear with regard to fluctuation of the rates of profit and erosion of the value of deposit due to inflation. The Term Depositors have also to forgo profit in case of premature encashment.
The pattern of Rates of Return on various types of cost bearing deposits of the traditional Banks in our Money Market have also an important bearing on allocation of weightage at different rates.
In consideration of the above factors, full weightage has been assigned to our Mudaraba Deposits of 36 months and relatively lower Weightages have been given to Mudaraba Deposits of lower periods, Mudaraba Savings and Mudaraba Short Notice Deposits.
Prepared by Forkan Uddin Mahmood

8. Principles of distribution of Profit to Mudaraba Depositors
On the basis of the above principles, let us work out the rates of profit using the information and figures given below: a)
Total Investment
Tk. 2000 b)
Total Investment Income (Net of provision for bad & doubtful investment) Tk c)
Total fund employed i)
Banks equity and Al-Wadeeah Deposits
ii)
Mudaraba Deposits Tk Tk
Therefore the share of investment income of Mudaraba Deposit will be (300 2000 1700) Tk
Less
Management fee 35% Tk
Distributable Income Tk
Prepared by Forkan Uddin Mahmood

9. Type of Mudaraba Deposit Share of Distributable Profit
Principles of distribution of Profit to Mudaraba Depositors
Sl. No
Type of Mudaraba Deposit
Yearly Prod.
Weigh-tage %
Weigh. Prod.
Share of Distributable Profit
Rate of Profit
(%) 1 2 3 4 5 6 7 a)
Mudaraba Hajj Savings i)
From to 25 years Term
150
135
202.50
18.01
12.01%
ii)
From 1 year to 10 years Term 50
130
65.00
5.78
11.56% b)
Mudaraba Waqf Cash Deposit 75
101.25
9.01 c)
Mudaraba Special Savings (Pension)
10 Years
125
162.50
14.45
5 Years
100
110
110.00
9.78
9.78% d)
Mudaraba Muhor Savings Account 90
117.00
10.41
121.00
10.76 e)
Mudaraba Savings Bond (MSB)
8 Years
112
140.00
12.45
11.12% 88
96.80
8.61
Prepared by Forkan Uddin Mahmood

10. Type of Mudaraba Deposit Share of Distributable Profit
Principles of distribution of Profit to Mudaraba Depositors
Sl. No
Type of Mudaraba Deposit
Yearly Prod.
Weigh-tage %
Weigh. Prod.
Share of Distributable Profit
Rate of Profit
(%) 1 2 3 4 5 6 7 f)
Mudaraba Monthly Profit Deposit Scheme (MMPDS)
100
120
120.00
10.67
10.67% g)
Mudaraba Term Deposits i)
36 Months
200
200.00
17.79
8.89%
ii)
24 Months 50 98
49.00
4.36
8.72%
iii)
12 Months 96
96.00
8.54
8.54%
iv)
06 Months 92
92.00
8.18
8.18% v)
03 Months 88
88.00
7.83
7.83% h)
Mudaraba Savings Deposit 75
37.50
3.34
6.67%
Mudaraba Foreign Currency Deposit J)
Mudaraba Special Notice Deposit 55
27.50
2.45
4.89%
TOTAL
1700
165.75
Rate of Profit: Fig. in Col 6 X 100 Fig in Col No 3
Prepared by Forkan Uddin Mahmood

11. Allah Hafez