Shariah compliance observed for new dollar product

The Islamic Bank of Asia launched its first Shariah-compliant liquidity product, which acts like a fixed deposit but is, of course, Sharia-compliant.

The USD Islamic Placement is similar to a conventional fixed deposit, except it is based on the Shariah principle of Murabaha, i.e., a cost plus profit sale contract. The USD Islamic Placement has a minimum placement amount of US$500,000 and has tenors of either three months or six months.

The USD Islamic Placement’s competitive rates of return will be pitched slightly higher than those of most conventional fixed deposits. It is jointly distributed by The Islamic Bank of Asia and DBS Bank's Private Banking division.

It also qualifies for the Singapore government’s guarantee for local and foreign currency deposits until 31 December 2010. The product’s offer period is for up to one month beginning 4 May 2009. DBS Trustee has been appointed as the agent to act on behalf of the customers in the Murabaha transactions.

Vince Cook, CEO of The Islamic Bank of Asia, said that the USD Islamic Placement product will give customers the opportunity to participate in the growing phenomenon of Islamic banking, and help pave the way for the development of more Islamic wealth management products for Singapore.

Mr Cook said: "The Islamic Bank of Asia offers world-class financing based on investment solutions that are in harmony with Shariah principals. It is an attractive alternative to investors who wish to diversify their portfolios, regardless of whether they are Muslims or non-Muslims. The USD Islamic Placement will help familiarise people with the attractions of Shariah-compliant products and create greater acceptance of Islamic banking in the marketplace."

Alkhafidz Md Som, The Islamic Bank of Asia’s Vice President of Product Development, said that the launch of the USD Islamic Placement marks the Bank’s entry into the wealth management space: "In light of the unprecedented events in the global marketplace, high net-worth clients are going back to basics, looking for investment options that are transparent, prudent, easy to understand, offer competitive returns and are highly liquid, and we have developed a product that meets those requirements."