Interest Free Deposit Products
Wadiah Saving Account
The term Wadiah is derived from the verb ‘Wada’a, which means to leave, lodge, or deposit, where the bank is authorized to keep the funds of the depositors in his or her safe custody for safety and convenience. The depositors are allowed to withdraw their money at any time without restriction. The bank assures the money is made available upon demand and gives a full guarantee of the principal amount. The bank, with the consent of customers, has the right to use the fund in any permissible business; however, the customer does not share profit or loss from business returns. The following are some of the types of Wadi’ah accounts and deposits.
Wadia is a trust agreement whereby the bank keeps funds of depositors who want to place their funds under safe custody without any benefit. It is a non-profit sharing deposit account that the bank provides for natural and legal persons who fulfill the bank’s policies and requirements. The minimum balance to open this account should be Birr 50.00. However, a Savings account may be opened and maintained with zero balance for a period of a one-month period. The account holder should credit at least a minimum of Birr 25.00 in his/her account within one month. However, if the account is not credited in the specified period, it should be closed following the regular account closing procedure.
Wadiah Current Account
Wadi’ah current account is similar to the conventional current account, and it is a non-profit bearing account which is opened and operated by literate customers, however; in rare cases, illiterate customers shall use this account by using their stamp printed by his/her name or signature in addition to the standard signature. The operation of the account can be performed through the use of cheques provided by the Bank to Wadi’ah account holders. The bank can invest all outstanding amounts in its absolute discretion, deems fit, and no returns of whatsoever nature is paid out to customers on this account. A minimum amount of Birr 500.00 is required to open an account for individual customers, and Birr 1000.00 is required for corporate and business customers.
Labbaik Wadiah Saving Account
Labbaik Wadi’ah Saving Account is a type of forced and commitment saving account for Hajji & Umrah pilgrimage. Labbaik wadi’ah saving account for Hajji and Umrah Pilgrimage is a type of saving account; thus, a passbook will be issued to the customers. The available tenure for the Umrah package ranges from one to three years and five to fifteen years for Hajji Package. Customers will have to monthly deposit in their account as per the proposed deposit plan; however, they are required to deposit any amount more than the agreed fund. Once the deposited amount reaches the selected package price, they can apply for withdrawal by filling the appropriate withdrawal format. Customers are allowed to withdraw from their credit balance without any form of restriction/limitation as to the amount and timings of the withdrawal, but they are not entitled to the program. At the time of maturity, customers withdraw their funds in full to utilize for Hajji-Umrah package offered by CBO Hajji-Umrah Package or by any other Travel Agent as per the discretion of Ethiopian Islamic Affairs Supreme Council.
ECX Wadi’ah Current Accounts
ECX offers an integrated warehouse system from the receipt of commodities based on industry-accepted grades and standards for each traded commodity by type to the ultimate delivery. Commodities are deposited in warehouses operated by ECX in major surplus regions of the country. These accounts are opened for the members of the Ethiopian Commodity Exchange to facilitate the trading of Commodity at ECX trading centers. The account opening and closure process is carried out by the Ethiopian Commodity Exchange, and the Bank’s Customers’ Account and Operation facilitate the opening of the account. The account is opened by members who are not on the mal-operations list.
Gammee-Junior Wadiah Saving Account
Gamme Junior wadi’ah saving account is a type of account designated for children (Junior) between 0-15. The account is opened in the children’s name, but parent and/or guardians administer it until the child is old enough to operate the account by him/herself. It is opened by individuals, both male, and female between the age of 0-15. Self-employed or employed juniors between these ages can open and operate this account by providing a letter of confirmation from the local administration and/or school administration. This account shall be converted to an ordinary savings account when the account holder reaches 18.
Mudarabah Saving Accounts
Ordinary Mudarabah Account
Mudarabah is a form of partnership in profit whereby one party or customer provides capital (rab-al-maal), and the bank offers management, skill, or labor (mudarib). The capital provider has granted the mudarib to undertake any lawful business activities. It is the responsibility of mudarib/bank to invest in any suitable investment reasonably expected to yield higher profit, shared as per the pre-agreed profit sharing ratio. Mudarabah can be in the form of a savings account or time deposit. The following are some of the Mudarabah saving accounts.
Coopbank – Islamic savings account is offered to depositors primarily to fulfill their precautionary motives of saving money and meeting some of their transaction and investment needs where relevant. Depositors save their money for the benefit of profit-sharing for an undefined time. The profit rate to be paid is determined based on the pre-agreed profit sharing ratio and the bank’s performance during the profit payment period. Savings accounts are designed specifically to meet the needs and requirements of customers who authorize the bank to invest their deposited money. Customers can deposit or withdraw funds at any time; thus, actual profits are shared at the ratio publicized by the bank and agreed between the two and on the basis of the monthly average balance.
The account is operated by the use of a passbook exclusively prepared for the purpose. The minimum balance to open this account is Birr 500.00 (Five Hundred) only. Accounts that shortfall the minimum monthly average deposit balance of Birr 1000 (One Thousand) on profit payment period shall not be eligible for profit sharing. Customers are allowed to withdraw from their credit balance without any restriction/limitation as to its amount and timing.
Sinqe – Women Mudarabah Saving Account
Sinqe – Women Mudarabah accounts shall refer to a type of saving account specifically designed for women aged 30 and above. The main aim of accepting Sinqe – women Mudarabah is saving accounts is to increase the saving culture of the women. Through empowering women, their saving culture will be improved, which in turn leads to a more robust financial inclusion. Customers of Sinqe – Women Mudarabah saving account holders get a higher profit sharing ratio as compared with ordinary Mudarabah saving account. Account maintenance and management are handled similarly to the ordinary Mudarabah Saving Account.
Dargago -Youth Mudarabah Saving Account
This account is designed for both male and female segments with the age of between 15 -29 years old, especially for the student. Youth account is designed exclusively for the youth of today to make tomorrow better by properly managing today’s attitude, lifestyle, preferences, and behavior. The bank, as an incentive, applies a better profit sharing ratio as compared with Ordinary Mudarabah Saving Accounts.
Gammee – Junior Mudarabah Saving Account
This account is opened by individuals, both male and female, between the age of 0-15. However, the account will be in the name of the child. The account will be administered by the parents/guardian until the child becomes able to do so. Deposit and/or withdrawal transactions are guided or supervised by parents/guardian/tutor. Self-employed Gammes between the ages of 0-15 years can open and operate this account by providing a letter of confirmation from the local administration and/or school administration. The account should be opened and operated by the parents jointly or by the parent or guardian, as the case may be. The bank allots higher profit sharing ratio with Gamme – Junior Mudarabah saving account holders as compared with ordinary Mudarabah saving accounts. This account shall be converted to Ordinary Mudarabah Saving Account, when the account holder reaches the age of 18.
Cooperatives Mudarabah Saving Account
Cooperatives Mudarabah saving account is opened by an autonomous association of individuals for mutual benefits to engage in retail, wholesale, production, manufacturing, etc. business enterprises. Cooperative mudarabah saving accounts are owned by customers who follow the cooperative principle of one person, one vote mechanism. Cooperative accounts are more often regulated under cooperative legislation. The main aim of launching this saving product is to encourage cooperatives in this scheme of saving. As the case may be, the bank allots a higher profit sharing ratio with cooperative mudarabah saving account holders as compared with ordinary mudarabah saving accounts.
Labbaik Mudarabah Saving Account
Labbaik Mudarabah saving account is opened for Hajji and Umrah Pilgrimage; thus, the customer will share the profit as well as be forced to saving for the purpose. The available tenure for the account ranges from one to three years for Umrah. For Hajji program, the available tenure ranges from five to fifteen years. Customers will have to monthly deposit in their account as per the proposed deposit plan. However, they are required to deposit any amount more than the agreed fund. Once the deposited amount reaches the proposed package amount, they can apply for withdrawal by filling the appropriate withdrawal format to credit Ethiopian Islamic Affairs account. As the case may be, the bank allots a higher profit sharing ratio with Labbaik mudarabah saving account holders as compared with ordinary mudarabah saving accounts.
Gudunfa Saving Account
Gudunfa is a type of mudarabah saving by the use of a designated box and deposits the accumulated fund into their account. Gudunfa box is provided by the bank, and dual control is in place; the box is mainly designed for petty traders, semi-skilled workers, shoe polishers, and other individuals working in private or public organizations. This account can be opened as wadi’ah saving account or as a profit-sharing Mudarabah saving account. The main aim is to encourage saving culture of low-income societies and daily laborers. As the case may be, the bank allots higher profit sharing ratio to Gudunfa mudarabah saving account holders as compared with ordinary mudarabah saving accounts.
Mudarabah Investment/Time Deposit Accounts
Mudarabah investment deposits represent the case when the owner of funds seeks a return on their funds and are willing to spare these funds for an agreed period. Customers who have idle funds usually want better returns. Fixed-term deposits in the conventional system operate on the basis of Interest, while investment accounts in Islamic banks operate on the basis of profit-sharing, which is a straightforward Mudarabah deposit. Mudarabah investment account enables customers to deposit specific sums of money with the bank throughout the year for specific periods of time. The bank uses flexible tenure of 3, 6, 12 18, 24 or more months) with the option to withdraw profits at specific times.
IFB Foreign Currency Deposit Products
Customers who fulfill the eligibility criteria can open foreign currency accounts in line with the requirements of the NBE in USD Dollar, Pound Sterling, and Euro currencies. The following are some of the basic features for the accounts;
- The source of fund is from abroad and in foreign currencies;
- The account is maintained in foreign currency or Birr;
- Customers living abroad can open these accounts;
- A foreign currency shall be credited to the account through FCY cash deposit, SWIFT transfer, telex, or foreign cheque deposits.
The following are some of the IFB deposit accounts and their features opened and maintained in foreign currencies in the names of Ethiopians and foreign nationals of Ethiopian origin (Diaspora Accounts):
- Diaspora Wadia (Safe Keeping) Saving Account
- Diaspora Wadia Current (FCY Checking/Demand) Account
- Diaspora Mudarabah FCY Saving Account
- Diaspora Mudarabah FCY Fixed Term Deposit
- Non-resident transferable foreign currency accounts (NRT FCY)
- Non-resident transferable birr accounts (NRT)
- Non-resident Non-transferable birr accounts (NRNT)
Wadi’ah ECOLFL Saving Account
Coopbank – Islamic rendering this service for the Ethiopian Citizen or Origin Living in Foreign Land (ECOLFL), the nature of the account is a Local Currency saving account opened by Non-Resident Ethiopians or Non- Resident Foreign Nationals of Ethiopian origin for personal emergency expenses, purchase or construction of residential or commercial houses, for business and investment in Ethiopia, or purchase of car in which all deposits are made in foreign currency. The operation of this account will be handled as per the Bank’s Procedure Manual.
Wadi’ah Retention Accounts
These types of accounts are opened by exporters. Customers are allowed to credits/deposits to these accounts only from export proceeds. Transfers can be done by SWIFT or telex Transfers through foreign banks, foreign currency cash notes deposited by foreign counterparts supported by customs declaration at the time of entering the country. Two types of retention accounts;
(a) Foreign exchange retention account A
The customer has to deposit 10% of the earned foreign currency as per the prevailing directive of NBE. The amount of this foreign currency used to settle the account holder’s obligation through foreign currency or converted to local currency when requested by the account holder.
(b) Foreign exchange retention account B
Customers are required to deposit 90% of the earned FCY up to 28 days. The balance shall automatically be converted into local currency after 28 days;