Interest Free Deposit Products

Wadiah Saving Account

The term Wadiah is derived from the verb ‘Wadi’ah, which means to leave, lodge, or deposit, where the bank is authorized to keep the funds of the depositors in his or her or its safe custody for safety and convenience. The depositors are allowed to withdraw their money at any time without restriction. The bank assures that 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 businesses; 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.

Wadi’ah 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 (Birr Fifty). Account opening with Zero balance is not allowed.

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 thump stamp printed by his/her/its 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 the collected deposits in permissible businesses and no return is paid out to customers on this account. A minimum amount of Birr 500.00 (Birr Five Hundred) is required to open an account for individual customers, and Birr 1000.00 (Birr One Thousand) 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.

Ethiopian Commodity Exchange (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/loss whereby one party or customer (Rab-al-maal) provides capital, and the bank (Mudarib) offers management, skill, or labor. The capital provider has granted the mudarib to undertake Shari’ah compliant business activities. It is the responsibility of mudarib/bank to invest in permissible investment reasonably expected to yield higher profit, shared as per the pre-agreed profit sharing ratio; however, the loss is shared by capital provider (Rabul mal) while the fund manager/ bank (mudarib) can have a loss of its time, energy, and skill, except the loss by the negligence of the fund manager/bank is covered by itself after confirmed through agreement, if not, by concerned legal or juridical or arbitrator body. Mudarabah can be in the form of a savings account or time deposit. The following are some of the Mudarabah saving accounts.

Coopbank – Al-Huda 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/ loss sharing for an undefined time. The profit rate to be paid is determined based on the pre-agreed profit sharing ratio and the amount of profit shared is based on the bank’s performance during the profit payment period. Savings accounts are designed specifically to meet the needs and requirements of customers who deposit in 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 (Birr 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 and Account maintenance and management are handled similarly to the ordinary Mudarabah Saving Account.

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 and Account maintenance and management are handled similarly to the ordinary Mudarabah Saving Account. 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 and account maintenance and management are handled similarly to the ordinary Mudarabah Saving Account.

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 and operational account maintenance and management are handled similarly to the ordinary Mudarabah Saving Account.

Gudunfa Saving Account

Gudunfa is a type of Wadi’ah 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. The main aim is to encourage saving culture of low-income societies and daily laborers.

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 Cheques 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 Wadi’ah (Safe Keeping) Saving Account
  • Diaspora Wadi’ah 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;