Shari'ah Deposit Principles and Process

Mambu has expanded our conventional banking platform to offer a comprehensive, fully Shari'ah-compliant Islamic banking feature. By allowing our customers to choose between conventional and Islamic banking options, Mambu is able to serve a wider customer segment by ensuring strict segregation and compliance for Islamic operations while continuing to serve our conventional clients effectively.

The principles of Islam, expressed by Shari'ah law, provide the foundation and the contracts built on these principles provide the structure for financial products.

Principles of Islamic banking

The basic principles that all Shari'ah-compliant products adhere to are:

• Shari'ah-based: Operating on Shari'ah principles, which prohibit the charging or payment of interest (riba)
• Prohibition of interest: Charging, collecting, or paying interest within financial contracts is strictly prohibited.
• Asset-backed financing: Transactions are real asset based. Due to existence of goods and services no expansion of money takes place and thus no inflation is created.
• Profit or loss sharing: Financial contracts ensure the equitable sharing of profits or losses among participants.
• Avoidance of Haram transactions: Transactions involving forbidden (haram) products are strictly forbidden.
• Transparency and ethical considerations: Islamic banks often emphasise ethical and socially responsible investments. They ensure transparency and adherence to Shari'ah principles.
• Zakat and charity: Islamic banks offer accounts and products that facilitate Zakat (Islamic almsgiving) payments. They may encourage charitable giving as part of their operations.
• Contractual framework: specialised contracts, such as Mudarabah (profit-sharing), Murabaha (cost-plus-profit sale), Ijara (leasing), and more, which comply with Shari'ah principles are used.

Islamic funding

Mambu offerings include:

The main functionality which enables Mambu to support Shari'ah-compliant deposit products is the profit sharing tool.

Profit sharing process

The following stages are used for profit sharing:

• Calculation of distributable income or revenue for the profit calculation period.
• Calculation of distributable expenses for the profit calculation period.
• Calculation of equivalent profit rate for the pool(s).
• Calculation of profit rate and amount for the product(s).
• Distribution of profit for each account.
• Profit approval based on the generated proposal.
• Profit application.

The diagram below outlines the key parameters involved in profit calculation:

• Income(s) & expense(s): Represent the profit or revenue for the investment period and can be allocated across multiple Pools based on specific allocation methods.
• Pools: Represent total deposits in all accounts used to carry out bank's investment and business activities. The profit calculation cycle, balance type, days in a month/year and GL accounts for accounting are set up on a pool level.
• Product and Accounts: Manages profit payment frequency, predefined profit rate rules (fixed rate, min, and max), customer/ bank share %, minimum eligible balance.

Cloud hosting providers

Profit Sharing is available for customers with Mambu shared and dedicated tenants on AWS, GCP, and Azure.

Restrictions and security

Early Access Limitations: Some restrictions may apply to features in early access. Please discuss your requirements with your Mambu Customer Success Manager.

These limitations ensure efficient utilisation of early access features while maintaining system stability and security.

Islamic Profit Sharing uses a High Availability setup that includes multiple availability zones for both compute and data services.

User rights

A user is anyone who accesses and uses Mambu via the UI or the API. Users are assigned permissions which determine the information they can access and the tasks they can perform.

For more information about see Understanding Users, Roles, and Permissions.

"Profit Sharing" permission(s) need to be given to user/ role to view information or to perform an action in Mambu that relates to profit sharing.

1. Create a New User

2. Create a Role

3. Create API Consumer

For more information, refer to API Consumers.

Getting help

For help with Islamic Profit Sharing, please see the various channels available that you can use on the Getting Support page.

For help with setting up your environment, see the Troubleshooting section.

The release notes for Islamic Profit Sharing can be found on our Release Notes page.