ACCELERATE INNOVATION. Expand your offerings. Finacle Islamic Banking Solution
Shariah-compliant solutions for tomorrow’s banking
T
oday, Islamic banking is a rapidly developing area and it can no longer be ignored by banks that want to stay competitive. A growing number of banks are already
responding to the opportunities presented by this new customer segment with a range of Shariah-compliant products. Over the past decade, assets of financial institutions offering Islamic products and services have soared by almost 25% year-on-year. Islamic financial services are nearing USD 1 trillion in reported managed assets. The total market size for Islamic banking systems is expected to grow from USD 1.1 billion in 2010 to about USD 1.6 billion in 2014. Governments and central banks have taken a lead in supervising Islamic banks, encouraging their growth and have passed Islamic banking and insurance laws in their countries. In such a scenario, conventional banks cannot afford to ignore the growing demand for Shariah-compliant products. They must leverage the wealth of information presented by Shariah scholars who have identified financial solutions that conform to Islamic ethics and the contractual mechanisms that bind them. A comprehensive Islamic banking solution that provides banks with end-to-end functionality to define and offer Shariah-compliant products will play a very critical role in addressing the needs of the burgeoning Islamic banking segment.
Finacle Islamic banking Finacle Islamic banking solution offers an
Islamic banking unit, if required. Finacle
display unified customer information
integrated and comprehensive approach
Islamic banking solution is developed from
enterprise-wide
for banks to define and present Shariah-
incisive insight into the Middle East, Far
compliant products to customers.
East, and European markets, and is truly
Differentiated because of its strong
geared to address region-specific Islamic
product definition and audit features, the
banking requirements.
ability to provide comprehensive control and support Islamic accounting, the solution is completely self-contained. It
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Extensive parameterization for business rules definition of multi-currency Islamic products
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Robust framework for automated as well as manual application of charges
A comprehensive end-to-end solution
•
Comprehensive description of underlying asset such as commodity,
is replete with the accounting backbone to support back office functionalities and
Finacle Islamic banking solution is suitable
real-estate, vehicles, consumer
provides Straight Through Processing
for both conventional banks that offer
durables
(STP) capabilities on a Service-Oriented
Islamic products as well as purely Islamic
Architecture (SOA) platform.
institutions. It supports the definition
A modular solution built on the standard technology infrastructure, Finacle Islamic banking solution addresses current requirements while factoring in flexibility to change the structure with scaling business needs. This means Islamic
of business rules pertaining to Islamic accounting, profit-sharing and Hirji date based processing. This comprehensive solution provides best of breed functionality including:
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Products and solutions that cater to
banking can be initiated as an add-on
Islamic part of retail, corporate and
product offering in a branch of choice, and
trade banking space
eventually converted to an independent
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Customer centric capabilities to
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Multi-currency, multi-branch enabled accounting backbone
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Pool management and profit sharing principles
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Validations on pool restrictions and commodity linkages to accounts
Functional architecture
Enterprise CRM
Origination
Marketing
Sales
Service
Islamic Investments
Functional Services
Reusable Business Components
360 Degree View
Islamic Financing
Mudarabah Term Deposits Murabaha Deposits Wakalah Deposits Wadiah Demand Deposits Product Factory
Knowledge Base
Communication Channels
Interaction
Enterprise Customer Information
Murabaha, Tawarruq, Ijarah, Musharaka, Mudarabah, Istisna, Salam, Bai Bithaman Ajil Bai Al Ina
Pool Management
Islamic Treasury**
Standing Orders
Sweeps/ Pooling
Payment Systems
Transaction Manager
Limits / Collaterals
Bill Payments
Liquidity Management
Clearing
Inventory
Referral
Pro t Module
Exchange rates
Bank Management
Channel Rules
Discounts/Preferential Pricing
Tax
General Ledger
Multi-Currency
Fees/ Charges Signature Veri cation
Multi-Branch
Accounting Backbone 24/7
Infrastructure
Multi-Lingual
Finacle Studio
Single Sign On
Integration Framework
Purge
Access Control
Work ow (BPEL/BMPL)
Reporting
Audit
Menu Manager
Batch Job Scheduler
**Supported through a partner solution.
Key modules Islamic financing products The module enables the bank to define and offer a range of asset products including
monthly, half yearly, and yearly frequency-based profit or rent
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Disburse payments in currencies other
Murabaha, Tawarruq, Musharaka, Ijarah,
than the loan account currency for
Istisna, Salam, and financing in addition to
bankers check, cashier check, ACH, and
Qard Hasan. Key features include the ability
SWIFT
to:
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Capture commodity and asset details,
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including those related to the seller and customer
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Capture the schedule of payment for asset purchase in accordance with the stage of construction or deal
• • •
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Settlement of financing accounts through Equated Installments (EI) and non-equated installment payments
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Corporate and consumer personal loans (as applicable in Tawarruq financing)
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Pool restriction validation at the time
Define and collect late payment
of commodity detail specification like
charges for installments
project and sector
Define mark-up and rebate amount in percentage and absolute terms in case of early settlement of financing
its parameters
accounts
•
•
Accept repayments through cash,
Define multiple products and modify
Track and create asset products using
Generate advices for customers
It also supports:
Define repayment holidays
transfer, postdated checks, and ACH
•
•
Murabaha and Tawarruq financing
•
the asset being financed and details of purchase, delivery, offer, and
Compute and report profit accrued on
Mudarabah pool-based funds
finance accounts funded under various
Apply daily, weekly, fortnightly,
pools
Capture of asset details–the details of
acceptance can be maintained
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Support the commodity purchase and
sale transactions for Murabaha and
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Tawarruq financing concepts
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Support rebate definition, computation, and accounting in case of
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early settlement
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Reschedule and defer the accounts keeping the unearned income
postponement, partial and complete
and forward Ijarah accounts. Calculate
early settlement
monthly lease rentals applicable for
Support the selling price and unearned income accounting entries
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EI and non EI calculations for Ijarah
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asset leased including the fixed rental
Salam and parallel Salam financing
and variable rental
This product can:
Collection, processing, and
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agreement details at account level
supplementary rent
including commodity and seller details
Collection and refund of Hamish processing of residual value in case of
Ijarah and forward Ijarah financing This product supports:
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financial Ijarah
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The lifecycle workflow and accounting
procurement to closure of financing account
repayment models for Salam financing
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Support deferment of installments and rescheduling of accounts. The option to charge or skip the profit for the
including progressive disbursements,
deferred period is parameterizable
and residual value
• •
Support EI and non-equated
Calculation of repayment schedule supplementary rent, advance fixed rent
entries applicable for Ijarah and forward Ijarah concepts, from asset
•
Jiddiyah. Support the collection and
unchanged
Capture Salam sale and parallel Salam
treatment of advance fixed rent and
Defining of rent renewal period Rescheduling, deferment,
Istisna and parallel Istisna financing With this product, banks can:
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Maintain the details for Istisna and origination level like the builder details,
•
defined using a wide range of parameters.
period and settlement period with
•
doing the adjustments based on the
Define a disbursement plan for the terms in the parallel Istisna contract
actual shared details
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Compute the ownership ratios based on the capital shares held. Facility
Support the single and progressive
to re-compute the ratios on each
collection and accounting of margin
repayment/ buyback of capital share
money amount
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Define whether the construction
Bai-Bithaman-Ajil and Bai-Al-Inah financing
period profit computation should be based on disbursed amounts as per
This product can:
disbursement schedule or based on full
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financing amount. It also facilitates recomputation of the un-earned income for any change in the release plans
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Compute and account for early settlement rebate based on defined rules
Musharaka and diminishing Musharaka financing This product can:
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Capture partnership details, profit and loss sharing details, and the buyback plan details at the financing origination
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including term deposits, demand
• •
Introduction of multiple products for different market segments
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Opening of time deposit and demand deposit accounts linked to a pool
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Ad-hoc funding of time deposit accounts
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Auto-rollover and auto-closure during product definition
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Pre-mature and part closure with the facility to collect fee
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Reinvestment or distribution of profit depending on parameter at the deposit level
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Payment of profit for the broken period
Define the Bank Selling Rate (BSR) and
(between the last profit distribution
the Effective Rate (ER) for an account
date and withdrawal date) on the
Calculate and account for selling price
following profit distribution date or on
using the bank selling rate
the date of withdrawal, based on the profit rate of the previous period or on
Support rebate computation and accounting
•
•
Support the commodity purchase, sale, and buy back transactions
•
deposits, and savings bank
Support profit accrual and charging on projected/ expected profit rate, and
Murabaha term deposits, demand and time-bound Mudarabah products
details, profit adjustment is due as per
different profit rates
financing account as per the agreed
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Support user reports to list accounts
the defined frequency Define the two periods–construction
Key features include support for:
where sharing of actual profit/ loss
and profit
•
profit/ loss details. The fee charging defined
retention details, asset details, costs,
•
demand deposits. These products can be
takes into account the grace period parallel Istisna contracts at the
•
define a fee for late submission of
Reschedule and defer the accounts keeping the unearned income unchanged
an indicative profit rate
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Simulation of the profit to be paid to the accounts
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Distributing final proceeds of matured deposits or profit payout based on
Islamic investment products
different options
•
level
The module supports definition and
Define the frequency and the grace
monitoring of Mudarabah investment and
accounts or a combined statement for
period for the customer to share the
savings products, Murabaha investment
all accounts of a customer. Customers
actual profit/ loss details facility to
product, Wakala deposit, and Wadiah
can exclude and include specified
Account statements for individual
• •
accounts from participating in the
normalization contribution as required
the calendars are the Saudi calendar (Um
combined statement
by the bank
Al Qura calendar) and the Kuwaiti calendar.
Specify profit distribution frequency for
Finacle Islamic banking solution supports
a pool
the following banking features on this
Overdraft against term deposit Payment of Hibah (gift) for accounts under Wadiah
• •
Define amount and tenor-based profit sharing percentage (between bank and
Mudarabah pool management and profit sharing
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Compute profit based on variables like profit and loss from asset investment
by accepting deposits and deploying
and inter-pool investment
investment.
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Distribute profit to customers based on the cumulative weighted average
This module can:
• •
into consideration the tenor of deposit,
funds, deploy it and also manage profit
amount of deposit, number of days the
distribution for deposits
deposit has run as on profit distribution
unrestricted, based on various pre-
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− Repayment of loan installments − Disbursement of loan − Deferment − Standing instructions − Batch jobs based on Hijri dates • End-user frontend screens − Enter and display Hijri date − Toggle between Hijri and Gregorian
date, and the profit sharing ratio
•
Opt for automated or manually defined
dates
•
Customer communication at Hijri-
country and sector, which are bank-
closes the pool on the pool end date
based frequency for advices and
definable parameters
based on validations
statements
Specify subscription period for an
with profit distribution in account currency
− Payout at pool frequency, account frequency Specify amount and tenor-wise indicative profit rate, as the
Murabaha deposits
• •
customer
collected for the pool
months based on sighting of the
customer
date shift operation that adjusts events
Commodities sale underlying
Multiple payout options–upfront, frequency based, maturity based
Hijri calendar The module also supports the Hijri calendar. The calendar, based on the lunar
Define management fees to be
Date shift–change in the start of Hijri crescent moon is handled through the
placement of deposit
•
•
Commodities purchase on behalf of
approximate rate applicable to the
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and standing instructions
pool closure. The automated process
− Single pool with multiple currencies
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Event processing – financing, deposits,
configured restriction types like
identified pool:
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balance of customer deposits; taking
Define an Islamic pool to mobilize
Specify a pool as restricted or
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customer)
The module helps the bank manage funds funds appropriately, for financing and
calendar:
year of 354 days, adjusts the number of days in each month in accordance with the
Define capital loss provision, profit
lunar cycle. The calendar has Hijrah as its
equalization provision, and profit
reference point. The two major variants of
appropriately, based on Hijri dates
Additional features
• • • • • • • • • • •
Asset provisioning and monitoring Standing instructions Statements and reports
a flexible and varied feature repertoire
performance for both conventional and
for banks to design and deploy products
Islamic banking are assured. All of this
for varying market segments, based
results in significantly lowered TCO for the
on different Islamic concepts including
bank.
Funds transfers
Mudarabah, Murabaha, Ijarah, Istisna, and
Common Customer Information File
Tawarruq. The solution also offers a wide
(CIF) across banking channels
range of possibilities for business users at
Process innovation leading to greater productivity and operational efficiency
the bank to create products and embellish Loan Origination System (LOS)
them with innovative features.
Limit and collateral maintenance Check and account number generation Signature verification Dual language support Multi-entity
BPML compliant workflow engine. This,
Lowered total cost of ownership
coupled with high parameterization
The solution’s custom-definable watertight
capabilities, results in greater process
modules address both international and
efficiency, better risk mitigation, and
Islamic banking needs. This empowers
support for rapid roll out of Shariah-
banks with the flexibility to define and
compliant products.
change the organization structure, offering
Business benefits
The solution is powered by the BPEL and
Islamic banking as an add-on product at a branch of choice, and then converting
Innovative product spread
it to an independent Islamic banking unit,
Finacle Islamic banking solution offers
if required. Proven scalability and robust
Finacle helps build tomorrow’s bank Finacle from Infosys partners with banks, the world over, to accelerate innovation and unlock the value levers of their business. It has never been this convenient for banks to adopt an integrated and comprehensive approach to define and present Shariah-compliant products to customers. Bring customers to tomorrow’s bank with Finacle Islamic banking.
About Infosys Finacle Infosys Finacle partners with banks to transform process, product and customer experience, arming them with ‘accelerated innovation’ that is key to building tomorrow’s bank.
For more information, contact finacleweb@infosys.com
www.infosys.com/finacle
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