ACCELERATE INNOVATION. Expand your offerings. Finacle Islamic Banking Solution

Expand your offerings.
Finacle Islamic Banking Solution
Shariah-compliant solutions for
tomorrow’s banking
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
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
is replete with the accounting backbone
A comprehensive end-to-end
Extensive parameterization for business
rules definition of multi-currency
Islamic products
Robust framework for automated as
well as manual application of charges
Comprehensive description of
underlying asset such as commodity,
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
(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:
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
Customer centric capabilities to
Multi-currency, multi-branch enabled
accounting backbone
Pool management and profit sharing
Validations on pool restrictions and
commodity linkages to accounts
Functional architecture
Islamic Investments
360 Degree
Islamic Financing
Mudarabah Term Deposits
Murabaha Deposits
Wakalah Deposits
Wadiah Demand Deposits
Murabaha, Tawarruq, Ijarah,
Musharaka, Mudarabah,
Istisna, Salam, Bai Bithaman Ajil
Bai Al Ina
Islamic Treasury**
Pool Management
Sweeps/ Pooling
Payment Systems
Limits /
Bill Payments
Profit Module
Exchange rates
Bank Management
Fees/ Charges
Channel Rules
Discounts/Preferential Pricing
Signature Verification
General Ledger
Finacle Studio
Single Sign On
Integration Framework
Access Control
Workflow (BPEL/BMPL)
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
It also supports:
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
Capture commodity and asset details,
including those related to the seller
and customer
Capture the schedule of payment for
asset purchase in accordance with the
stage of construction or deal
Define repayment holidays
Accept repayments through cash,
transfer, postdated checks, and ACH
Corporate and consumer personal
loans (as applicable in Tawarruq
Pool restriction validation at the time
project and sector
Define mark-up and rebate amount
case of early settlement of financing
Apply daily, weekly, fortnightly,
non-equated installment payments
charges for installments
its parameters
Mudarabah pool-based funds
through Equated Installments (EI) and
of commodity detail specification like
in percentage and absolute terms in
Settlement of financing accounts
Define and collect late payment
Define multiple products and modify
Track and create asset products using
Generate advices for customers
Murabaha and Tawarruq financing
the asset being financed and details
of purchase, delivery, offer, and
Compute and report profit accrued on
finance accounts funded under various
Capture of asset details–the details of
acceptance can be maintained
Support the commodity purchase and
sale transactions for Murabaha and
EI and non EI calculations for Ijarah
postponement, partial and complete
and forward Ijarah accounts. Calculate
early settlement
Support the selling price and unearned
monthly lease rentals applicable for
income accounting entries
Support rebate definition,
computation, and accounting in case of
Tawarruq financing concepts
keeping the unearned income
This product supports:
Collection, processing, and
Collection and refund of Hamish
financial Ijarah
Capture Salam sale and parallel Salam
agreement details at account level
supplementary rent
including commodity and seller details
Support EI and non-equated
repayment models for Salam financing
Support deferment of installments and
rescheduling of accounts. The option
Calculation of repayment schedule
to charge or skip the profit for the
including progressive disbursements,
deferred period is parameterizable
supplementary rent, advance fixed rent
entries applicable for Ijarah and
procurement to closure of financing
This product can:
processing of residual value in case of
The lifecycle workflow and accounting
forward Ijarah concepts, from asset
and variable rental
Jiddiyah. Support the collection and
Ijarah and forward Ijarah financing
Salam and parallel Salam financing
treatment of advance fixed rent and
early settlement
Reschedule and defer the accounts
asset leased including the fixed rental
and residual value
Defining of rent renewal period
Rescheduling, deferment,
Istisna and parallel Istisna financing
With this product, banks can:
Maintain the details for Istisna and
parallel Istisna contracts at the
origination level like the builder details,
period and settlement period with
Support the single and progressive
period profit computation should be
based on disbursed amounts as per
disbursement schedule or based on full
financing amount. It also facilitates recomputation of the un-earned income
for any change in the release plans
Compute and account for early
settlement rebate based on defined
Musharaka and diminishing
Musharaka financing
This product can:
Capture partnership details, profit and
loss sharing details, and the buyback
plan details at the financing origination
the defined frequency
Support profit accrual and charging
actual shared details
Compute the ownership ratios based
to re-compute the ratios on each
repayment/ buyback of capital share
money amount
Define whether the construction
Support user reports to list accounts
on the capital shares held. Facility
collection and accounting of margin
Key features include support for:
doing the adjustments based on the
Define a disbursement plan for the
terms in the parallel Istisna contract
takes into account the grace period
on projected/ expected profit rate, and
different profit rates
financing account as per the agreed
defined using a wide range of parameters.
Bai-Bithaman-Ajil and Bai-Al-Inah
This product can:
including term deposits, demand
Define the Bank Selling Rate (BSR) and
deposits, and savings bank
Introduction of multiple products for
different market segments
Opening of time deposit and demand
deposit accounts linked to a pool
Ad-hoc funding of time deposit
Auto-rollover and auto-closure during
product definition
Pre-mature and part closure with the
facility to collect fee
Reinvestment or distribution of profit
depending on parameter at the deposit
Support the commodity purchase, sale,
and buy back transactions
Murabaha term deposits, demand
and time-bound Mudarabah products
details, profit adjustment is due as per
and profit
Define the two periods–construction
demand deposits. These products can be
profit/ loss details. The fee charging
where sharing of actual profit/ loss
retention details, asset details, costs,
define a fee for late submission of
Payment of profit for the broken period
(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
Reschedule and defer the accounts
keeping the unearned income
an indicative profit rate
Simulation of the profit to be paid to
the accounts
Distributing final proceeds of matured
deposits or profit payout based on
Islamic investment products
different options
The module supports definition and
Define the frequency and the grace
monitoring of Mudarabah investment and
accounts or a combined statement for
savings products, Murabaha investment
all accounts of a customer. Customers
product, Wakala deposit, and Wadiah
can exclude and include specified
period for the customer to share the
actual profit/ loss details facility to
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
Define amount and tenor-based profit
Overdraft against term deposit
Payment of Hibah (gift) for accounts
under Wadiah
Mudarabah pool management and
profit sharing
The module helps the bank manage funds
sharing percentage (between bank and
into consideration the tenor of deposit,
amount of deposit, number of days the
distribution for deposits
deposit has run as on profit distribution
Specify a pool as restricted or
Opt for automated or manually defined
and standing instructions
−−Repayment of loan installments
−−Disbursement of loan
−−Standing instructions
−−Batch jobs based on Hijri dates
• End-user frontend screens
−−Enter and display Hijri date
−−Toggle between Hijri and Gregorian
Customer communication at Hijri-
pool closure. The automated process
country and sector, which are bank-
closes the pool on the pool end date
based frequency for advices and
definable parameters
based on validations
Specify subscription period for an
with profit distribution in account
−−Payout at pool frequency, account
Specify amount and tenor-wise
indicative profit rate, as the
approximate rate applicable to the
date, and the profit sharing ratio
Event processing – financing, deposits,
configured restriction types like
−−Single pool with multiple currencies
balance of customer deposits; taking
funds, deploy it and also manage profit
identified pool:
Distribute profit to customers based
Define an Islamic pool to mobilize
unrestricted, based on various pre-
and inter-pool investment
on the cumulative weighted average
This module can:
Compute profit based on variables like
profit and loss from asset investment
by accepting deposits and deploying
funds appropriately, for financing and
Define management fees to be
collected for the pool
Murabaha deposits
Date shift–change in the start of Hijri
months based on sighting of the
Commodities purchase on behalf of
crescent moon is handled through the
date shift operation that adjusts events
Commodities sale underlying
placement of deposit
Multiple payout options–upfront,
frequency based, maturity based
Hijri calendar
The module also supports the Hijri
calendar. The calendar, based on the lunar
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
Funds transfers
Mudarabah, Murabaha, Ijarah, Istisna, and
Common Customer Information File
Tawarruq. The solution also offers a wide
(CIF) across banking channels
Loan Origination System (LOS)
range of possibilities for business users at
the bank to create products and embellish
them with innovative features.
Limit and collateral maintenance
Check and account number generation
Signature verification
Dual language support
Process innovation leading to
greater productivity and operational
The solution is powered by the BPEL and
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
Islamic banking needs. This empowers
banks with the flexibility to define and
change the organization structure, offering
Business benefits
Islamic banking as an add-on product at a
Innovative product spread
it to an independent Islamic banking unit,
Finacle Islamic banking solution offers
if required. Proven scalability and robust
branch of choice, and then converting
efficiency, better risk mitigation, and
support for rapid roll out of Shariahcompliant products.
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 [email protected]
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