Project: Islamic Banking & Finance Study Guide Series

Study Guide: One

Title: Liability Management in Islamic Banks & Financial Institutions
Tag Line: Deposit Mobilization, Profit & Loss Calculation and Distribution, Pool Management
utions
bution, Pool Management
 Max. 100
Section 1 – Learning Basic Concepts pages

Chapter 1
Conventional Banking
Introduction
The Origin & Evolution of Banking System
Definition of Bank
Financial Intermediation & Bank Transformation Mechanism
Good to Know: Need of Banking System in Today’s World
Creation of Money & Fractional Reserve in Banking System
Types of Banks
Services Offered by Commercial Banks
Deposit-taking on interest
Lending on interest
Investment on interest
Foreign Trade/ International Trade and Finance on interest
Bank Guarantees
Foreign Exchange Services
Money transmission services/ Remittances and payments
Cash Management Services
Other services
Negotiable & Non Negotiable Credit Instruments
Bank Advances
Chapter 2
Islamic Banking
Introduction
The Origin & Evolution of Islamic Banking System
Definition of Islamic Bank
Financial Intermediation Islamic Banking System
Good to Know: Need of Islamic Banking System in Today’s World
The Difference between Islamic & Conventional Banking
Fundamental Concepts of Islamic Banking & Finance
Classification of Contracts in Islamic Commercial Law
Services Offered by Islamic Commercial Banks
Bank Financing
Chapter 3
Understanding Deposits
Introduction
Deposits & its Classification
Deposit Mobilization in Islamic Banks
Features of Deposits in Islamic Banks
Non remunerative accounts – Current Account/ Demand Deposit
Qard based Current accounts
Amanah/ Wadi’ah based current accounts
Remunerative Accounts – Savings & Term Deposits
Mudarabah based Accounts
Wakalah al Istismaar based Accounts
Tawarruq based Accounts
Comparison of Deposit Side of Islamic & Conventional Banks
Chapter 4
Understanding Advances/ Financing
Introduction
Types of Financing Operations in Banks
Modes of Financing in Islamic Banks
Debt Type Instruments
Quasi – Debt Type Instruments
Profit & Loss Sharing Instruments
Hybrid or Combination Modes
Chapter 5
Understanding Liquidity Management
Introduction
Financial Instruments in Islamic Banking
Chapter 6
 Fee Based Operations in Banking
Introduction
Islamic Banks Fee Based Operations

Section Round-up
 Section 2 – Pool Management
Chapter 7
Creation & Identification of Pool
Introduction
Creation of Pool
Utilization of Funds
Types of Pool
Good to Know: Need for Different Pools
Pool Identification
Chapter 8
Pool Tagging & Inter Pool Transfer
Pool Tagging - Product Type
Pool Tagging - Asset
Value Date Pool Tagging
Inter Pool Transfer
Pool Adjustments
Pool Balancing
Pool Reconciliation

Section Round-up
 Section 3 – Pool Accounting
Chapter 9
Calculation of Net Profit of the Pool
Chapter 10
Determination of the Shareholders’ Funds Invested in the Pool
Chapter 11
Determination of the Depositors’ Funds in the Pool

Section Round-up
 Section 4 – Profit & Loss Distribution
Chapter 12
The Concept of Weightages
Chapter 13
Profit Sharing Ratio/Mudarib Share
Chapter 14
Calculating Profit Rates
Chapter 15
Profit Distribution
Product-wise Profit Distribution
Profit Distribution Steps
Allocation of Profit Equalization Reserve
Creation of Investment Risk Reserve
Complications in Profit Sharing
Early Redemption/ Pre-Mature Encashment
Premium Payments

Section Round-up
 Section 5 – Protecting Capital & Obtaining and Deploying
Liquidity
Chapter 15
Protecting Capital
Shari’a Compliant Means for Protecting Capital
Shari’a Non-Compliant Means for Protecting Capital
Chapter 16
Profit Equalization Reserve & Investment Risk Reserve
Section Round-up
Section 6 – Conversion of Interest based Deposit into P&L
Chapter 17
Converting Liability Side of Interest-based Bank into Islamic Bank
Section Round-up
Section 6 – Common Mistakes in Pool Management