Islamic Banking Fundraising

Abstract

Fundraising is the primary activity of Islamic banks, which act as financial intermediaries responsible for managing public funds and distributing them to those in need. Within the Islamic banking system, fundraising products fall into two main categories: savings and investment products. The primary distinction between the two lies in the customer's motive, whether to simply save funds or to earn returns.

The discussion in this paper focuses on two main principles in fundraising: wadiah and mudharabah . The wadiah principle is a deposit contract that gives the fund owner the right to withdraw funds at any time without any obligation to provide a return from the bank. This principle is applied to wadiah checking and savings products. Conversely, the mudharabah principle is a business cooperation contract between the fund owner ( shahibul maal ) and the fund manager ( mudharib ) with a profit-sharing system based on an agreed-upon ratio (nisbah). This contract is used in mudharabah savings and deposit products, with the provision that the use of funds must comply with sharia principles.

By implementing these two principles, Islamic banks function not only as depository institutions but also as investment managers, aiming to maintain fairness, transparency, and accountability in economic activities. Therefore, fundraising in Islamic banking plays a crucial role in promoting safe, productive financial management that is in accordance with Islamic values.