full amount back from the bank. Banks adopt several methods of inducing their clients to deposit with them but no profit is promised. In other banks, savings accounts are treated as investment accounts but with less stringent conditions as to withdrawals and minimum balance. Capital is not guaranteed but the banks take care to invest money from such accounts in relatively risk free short-term projects. As such lower profit rates are expected and that too only on a portion of the average minimum balance on the ground that a high level of reserves needs to be kept at all times to meet withdrawal demands. Investment deposits are accepted for a fixed or unlimited period of time and the investors agree in advance to share the profit or loss in a given proportion with the bank.In addition to the above deposit accounts, some Islamic banks have additional accounts as follows:- Trust Deposits: These deposits are not subject to any conditions for drawing or depositing. The bank may use such deposits at its own risk and responsibility in respect of profit or loss.- Joint Investment Accounts: These are deposits received by the bank from persons who desire to participate with the bank in multilateral and continuous investment operations. Such deposits receive a certain percentage of the annual net profits realized. The way of investing these funds is left to the bank’s discretion. Means of Financing:Banks adopt several means of acquiring assets or financing projects and these can be categorized in three areas: investment, trade and lending.Investment financing:This is done in three different ways:1. Musharaka (venture/equity financing) where a bank may join another entity to setup a joint venture, both parties participating in the various aspects of the project in varying degree. Profits and losses are shared in a pre-arranged fashion. The venture is an independent legal entity and the bank may withdraw gradually after an initial peri...
