Finacle Islamic Banking Solution for Tomorrow's Banking

8/12/2019 Finacle Islamic Banking Solution for Tomorrow's Banking

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Expand your offerings.ACCELERATE INNOVATION.

Finacle Islamic Banking Solution


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Shariah-compliant solutions fortomorrows banking

responding to the opportunities presented by this new customer segment with a rangeof Shariah-compliant products. Over the past decade, assets of financial institutionsoffering Islamic products and services have soared by almost 25% year-on-year. Islamicfinancial services are nearing USD 1 trillion in reported managed assets. The totalmarket size for Islamic banking systems is expected to grow from USD 1.1 billion in2010 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 Islamicbanking and insurance laws in their countries.In such a scenario, conventional banks cannot afford to ignore the growing demand forShariah-compliant products. They must leverage the wealth of information presentedby Shariah scholars who have identified financial solutions that conform to Islamicethics and the contractual mechanisms that bind them. A comprehensive Islamicbanking solution that provides banks with end-to-end functionality to define and offerShariah-compliant products will play a very critical role in addressing the needs of theburgeoning Islamic banking segment.

Today, 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


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Finacle Islamic bankingFinacle Islamic banking solution offers anintegrated and comprehensive approachfor banks to define and present Shariah-compliant products to customers.Differentiated because of its strongproduct definition and audit features, theability to provide comprehensive controland support Islamic accounting, thesolution is completely self-contained. Itis replete with the accounting backboneto support back office functionalities andprovides Straight Through Processing(STP) capabilities on a Service-OrientedArchitecture (SOA) platform.A modular solution built on the standardtechnology infrastructure, Finacle Islamicbanking solution addresses currentrequirements while factoring in flexibilityto change the structure with scalingbusiness needs. This means Islamicbanking can be initiated as an add-onproduct offering in a branch of choice, andeventually converted to an independent

Islamic banking unit, if required. FinacleIslamic banking solution is developed fromincisive insight into the Middle East, FarEast, and European markets, and is trulygeared to address region-specific Islamicbanking requirements.

display unified customer informationenterprise-wideExtensive parameterization for businessrules definition of multi-currencyIslamic productsRobust framework for automated aswell as manual application of chargesComprehensive description ofunderlying asset such as commodity,real-estate, vehicles, consumerdurablesMulti-currency, multi-branch enabledaccounting backbonePool management and profit sharingprinciplesValidations on pool restrictions andcommodity linkages to accounts

A comprehensive end-to-endsolutionFinacleIslamic banking solutionis suitablefor both conventional banks that offerIslamic products as well as purely Islamicinstitutions. It supports the definitionof business rules pertaining to Islamicaccounting, profit-sharing and Hirji datebased processing. This comprehensivesolution provides best of breedfunctionality including:

Products and solutions that cater toIslamic part of retail, corporate andtrade banking spaceCustomer centric capabilities to
http://www.infosys.com/finacle/solutions/pages/islamicbanking.aspxhttp://www.infosys.com/finacle/solutions/pages/islamicbanking.aspxhttp://www.infosys.com/finacle/solutions/pages/islamicbanking.aspxhttp://www.infosys.com/finacle/solutions/pages/islamicbanking.aspx


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Functional architecture

CommunicationChannels KnowledgeBase 360 DegreeViewEnterprise

CRMOrigination Marketing Sales Service Interaction

Islamic InvestmentsMudarabah Term DepositsMurabaha DepositsWakalah DepositsWadiah Demand Deposits

Pool ManagementStandingOrders

FunctionalServices

Islamic FinancingEnterpriseCustomer

InformationProductFactory

Murabaha, Tawarruq, Ijarah,Musharaka, Mudarabah,Istisna, Salam, Bai Bithaman AjilBai Al Ina

Islamic Treasury**Sweeps/ Pooling

LiquidityManagementExchange ratesChannel Rules

Payment SystemsClearing

TransactionManagerInventory

Limits /Collaterals

ReferralBill PaymentsPro t Module

ReusableBusiness

ComponentsBank Management

Discounts/Preferential PricingFees/ Charges

Signature Veri cationTax

AccountingBackbone

General Ledger Multi-Currency Multi-Branch

24/7Integration Framework

Multi-LingualPurgeAudit

Finacle StudioAccess ControlMenu Manager

Single Sign OnWork ow (BPEL/BMPL)

Batch Job SchedulerInfrastructure Reporting**Supported through a partner solution.


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Key modulesIslamic financing productsThe module enables the bank to define andoffer a range of asset products includingMurabaha, Tawarruq, Musharaka, Ijarah,Istisna, Salam, and financing in addition toQard Hasan. Key features include the abilityto:

monthly, half yearly, and yearly

Generate advices for customers

frequency-based profit or rentDisburse payments in currencies otherthan the loan account currency forbankers check, cashier check, ACH, andSWIFTDefine repayment holidaysAccept repayments through cash,transfer, postdated checks, and ACHDefine and collect late paymentcharges for installmentsDefine mark-up and rebate amountin percentage and absolute terms incase of early settlement of financingaccountsCompute and report profit accrued on

finance accounts funded under variouspools

It also supports:Settlement of financing accountsthrough Equated Installments (EI) andnon-equated installment paymentsCorporate and consumer personal

loans (as applicable in Tawarruqfinancing)Pool restriction validation at the timeof commodity detail specification likeproject and sector

Capture commodity and asset details,including those related to the sellerand customerCapture the schedule of payment forasset purchase in accordance with thestage of construction or dealDefine multiple products and modifyits parametersTrack and create asset products usingMudarabah pool-based fundsApply daily, weekly, fortnightly,

Murabaha and Tawarruq financing

Capture of asset detailsthe details ofthe asset being financed and detailsof purchase, delivery, offer, andacceptance can be maintainedSupport the commodity purchase and


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sale transactions for Murabaha and EI and non EI calculations for Ijarahand forward Ijarah accounts. Calculatemonthly lease rentals applicable forasset leased including the fixed rentaland variable rentalCollection, processing, andtreatment of advance fixed rent andsupplementary rentCollection and refund of HamishJiddiyah. Support the collection andprocessing of residual value in case offinancial IjarahCalculation of repayment scheduleincluding progressive disbursements,supplementary rent, advance fixed rentand residual valueDefining of rent renewal periodRescheduling, deferment,

postponement, partial and completeearly settlement

Tawarruq financing conceptsSupport the selling price and unearnedincome accounting entriesSupport rebate definition,computation, and accounting in case ofearly settlementReschedule and defer the accountskeeping the unearned incomeunchanged

Salam and parallel Salam financingThis product can:

Capture Salam sale and parallel Salamagreement details at account levelincluding commodity and seller detailsSupport EI and non-equatedrepayment models for Salam financingSupport deferment of installments andrescheduling of accounts. The optionto charge or skip the profit for thedeferred period is parameterizable

Ijarah and forward Ijarah financingThis product supports: The lifecycle workflow and accounting

entries applicable for Ijarah andforward Ijarah concepts, from assetprocurement to closure of financingaccount


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Istisna and parallel Istisna financingWith this product, banks can:

define a fee for late submission ofprofit/ loss details. The fee chargingtakes into account the grace perioddefinedSupport user reports to list accountswhere sharing of actual profit/ lossdetails, profit adjustment is due as perthe defined frequencySupport profit accrual and chargingon projected/ expected profit rate, anddoing the adjustments based on theactual shared detailsCompute the ownership ratios basedon the capital shares held. Facilityto re-compute the ratios on eachrepayment/ buyback of capital share

demand deposits. These products can bedefined using a wide range of parameters.Key features include support for: Maintain the details for Istisna and

parallel Istisna contracts at theorigination level like the builder details,retention details, asset details, costs,and profitDefine the two periodsconstructionperiod and settlement period withdifferent profit ratesDefine a disbursement plan for thefinancing account as per the agreedterms in the parallel Istisna contractSupport the single and progressivecollection and accounting of marginmoney amountDefine whether the constructionperiod profit computation should bebased on disbursed amounts as perdisbursement schedule or based on fullfinancing amount. It also facilitates re-computation of the un-earned incomefor any change in the release plansCompute and account for earlysettlement rebate based on definedrules

Murabaha term deposits, demandand time-bound Mudarabah productsincluding term deposits, demanddeposits, and savings bankIntroduction of multiple products fordifferent market segmentsOpening of time deposit and demanddeposit accounts linked to a poolAd-hoc funding of time depositaccountsAuto-rollover and auto-closure duringproduct definitionPre-mature and part closure with thefacility to collect feeReinvestment or distribution of profitdepending on parameter at the depositlevelPayment of profit for the broken period(between the last profit distributiondate and withdrawal date) on thefollowing profit distribution date or onthe date of withdrawal, based on theprofit rate of the previous period or onan indicative profit rateSimulation of the profit to be paid tothe accountsDistributing final proceeds of matureddeposits or profit payout based ondifferent optionsAccount statements for individualaccounts or a combined statement forall accounts of a customer. Customerscan exclude and include specified

Bai-Bithaman-Ajil and Bai-Al-Inahfinancing

This product can:

Support the commodity purchase, sale,and buy back transactionsDefine the Bank Selling Rate (BSR) andthe Effective Rate (ER) for an accountCalculate and account for selling priceusing the bank selling rateSupport rebate computation andaccountingReschedule and defer the accountskeeping the unearned incomeunchanged

Musharaka and diminishingMusharaka financingThis product can:

Capture partnership details, profit andloss sharing details, and the buybackplan details at the financing originationlevelDefine the frequency and the graceperiod for the customer to share theactual profit/ loss details facility to

Islamic investment productsThe module supports definition andmonitoring of Mudarabah investment andsavings products, Murabaha investmentproduct, Wakala deposit, and Wadiah


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accounts from participating in the normalization contribution as required the calendars are the Saudi calendar (UmAl Qura calendar) and the Kuwaiti calendar.Finacle Islamic banking solution supportsthe following banking features on thiscalendar:

combined statementOverdraft against term depositPayment of Hibah (gift) for accountsunder Wadiah

by the bankSpecify profit distribution frequency fora poolDefine amount and tenor-based profitsharing percentage (between bank andcustomer)Compute profit based on variables likeprofit and loss from asset investmentand inter-pool investmentDistribute profit to customers basedon the cumulative weighted averagebalance of customer deposits; takinginto consideration the tenor of deposit,amount of deposit, number of days thedeposit has run as on profit distributiondate, and the profit sharing ratioOpt for automated or manually definedpool closure. The automated processcloses the pool on the pool end datebased on validations

Mudarabah pool management andprofit sharingThe module helps the bank manage fundsby accepting deposits and deployingfunds appropriately, for financing andinvestment.This module can:

Event processingfinancing, deposits,and standing instructions

Define an Islamic pool to mobilizefunds, deploy it and also manage profitdistribution for depositsSpecify a pool as restricted orunrestricted, based on various pre-configured restriction types likecountry and sector, which are bank-definable parametersSpecify subscription period for anidentified pool:

Repayment of loan installmentsDisbursement of loanDefermentStanding instructionsBatch jobs based on Hijri dates End-user frontend screensEnter and display Hijri dateToggle between Hijri and Gregorian

datesCustomer communication at Hijri-based frequency for advices andstatementsDate shiftchange in the start of Hijrimonths based on sighting of thecrescent moon is handled through thedate shift operation that adjusts eventsappropriately, based on Hijri dates

Murabaha deposits

Single pool with multiple currencieswith profit distribution in account

Commodities purchase on behalf ofcustomerCommodities sale underlyingplacement of depositMultiple payout optionsupfront,

frequency based, maturity based

Payout at pool frequency, account

frequencySpecify amount and tenor-wiseindicative profit rate, as theapproximate rate applicable to thecustomerDefine management fees to becollected for the poolDefine capital loss provision, profitequalization provision, and profit

currency

Hijri calendarThe module also supports the Hijricalendar. The calendar, based on the lunaryear of 354 days, adjusts the number ofdays in each month in accordance with thelunar cycle. The calendar has Hijrah as itsreference point. The two major variants of


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Additional features

Asset provisioning and monitoringStanding instructionsStatements and reportsFunds transfersCommon Customer Information File(CIF) across banking channelsLoan Origination System (LOS)Limit and collateral maintenanceCheck and account number generationSignature verificationDual language supportMulti-entity

a flexible and varied feature repertoirefor banks to design and deploy productsfor varying market segments, basedon different Islamic concepts includingMudarabah, Murabaha, Ijarah, Istisna, andTawarruq. The solution also offers a widerange of possibilities for business users atthe bank to create products and embellishthem with innovative features.

performance for both conventional andIslamic banking are assured. All of thisresults in significantly lowered TCO for thebank.Process innovation leading togreater productivity and operationalefficiencyThe solution is powered by the BPEL andBPML compliant workflow engine. This,coupled with high parameterizationcapabilities, results in greater processefficiency, better risk mitigation, andsupport for rapid roll out of Shariah-compliant products.

Lowered total cost of ownershipThe solutions custom-definable watertightmodules address both international andIslamic banking needs. This empowersbanks with the flexibility to define andchange the organization structure, offeringIslamic banking as an add-on product at abranch of choice, and then convertingit to an independent Islamic banking unit,if required. Proven scalability and robust

Business benefitsInnovative product spreadFinacle Islamic banking solution offers


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Finacle helps build tomorrows bankFinacle from Infosys partners with banks, the world over, to accelerate innovation and unlock the value levers of theirbusiness. It has never been this convenient for banks to adopt an integrated and comprehensive approach to define andpresent Shariah-compliant products to customers.Bring customers to tomorrows bank with Finacle Islamic banking.


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About Infosys FinacleInfosys Finacle partners with banks to transform process, product and customer experience, arming them with accelerated innovation that is key to building tomorrows bank. For more information, contact [email protected] www.infosys.com/finacle 2013 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice.Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as ex pressly permitted,neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording orotherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

Finacle Islamic Banking Solution for Tomorrow's Banking

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