Model Bank

Islamic Banking – Pre-Sales Demo User

Guide (R23 AMR Build)

Information in this document is subject to

change without notice.
No part of this document may be reproduced
or transmitted in any form or by any means, for
any purpose, without the express written
permission of TEMENOS HEADQUARTERS
SA.
© 2022 Temenos Headquarters SA -
all rights reserved.
Islamic Banking – Presales Demo Guide - Post R23 AMR

Contents
Document History ............................................................................................................................... 3
1.0 Introduction................................................................................................................................... 3
2.0 General Guidelines ....................................................................................................................... 4
2.1 Navigation/Screen Resolution............................................................................................................. 4
3.0 Role Based Home Pages............................................................................................................... 4
3.1 Islamic Credit Officer........................................................................................................................... 4
3.2 Islamic Credit Manager................................................................................................................ .......5
4.0 Demo Data ................................................................................................................................. ..6
4.1 Islamic Customers..............................................................................................................................6
4.2 Vendors..............................................................................................................................................6
4.3 Brokers...............................................................................................................................................7
4.4 Reviewers............................................................................................................................. ..............7
4.5 Asset Purchase Details.......................................................................................................................7
4.6 Vendor Murabaha Finance Arrangements..........................................................................................8
5.0 Single Customer View- Islamic Customer ....................................................................................... 9
6.0 List of Islamic Products Available in Model Bank ......................................................................... ..10
6.1 Accounts............................................................................................................................................10
6.2 Deposits.............................................................................................................................................10
6.3 Facility............................................................................................................................. ...................10
6.4 Finance..............................................................................................................................................10
6.5 Profit Declaration for Mudaraba finance............................................................................................11
7.0 Profit Distribution System............................................................................................................. 11

2
Islamic Banking – Presales Demo Guide - Post R23 AMR

Document History

Author Version Date

Bhuvana P 0.1 28-Feb-2023

Sankara Narayanan R 1.0 01-Mar-2023

Comments:

0.1 – Initial version

1.0 – Reviewed and baselined

1.0 Introduction

3
Islamic Banking – Presales Demo Guide - Post R23 AMR

“Model Bank Reference System” is released with demo data to enable the Pre-Sales to demonstrate Transact
Model bank with Islamic functionality.

2.0 General Guidelines

While demonstrating the Islamic functionalities, please login with the Username/password provided for each
Role – refer to below for the details

2.1 Navigation/Screen Resolution

Please avoid using the Command line while demonstrating enquiries, versions etc., instead use the Menu.

3.0 Role Based Home Pages

The following Role Based Home pages are present in Islamic Banking operations with default password with
123456.

Roles Username Password

Islamic Credit Officer ISCREDITOFFICER 123456

Islamic Credit Manager ISCREDITMANAGER 123456

3.1 Islamic Credit Officer

Islamic Credit Officer is responsible for processing and maintaining Islamic Finances. The home page for Islamic
Credit Officer in Model Bank has been designed with a custom set of enquiries and menus required by the User
to perform the Day-to-day activities.

4
Islamic Banking – Presales Demo Guide - Post R23 AMR

3.2 Islamic Credit Manager

Islamic Credit Manager is responsible for monitoring Islamic Finance arrangements and Finance arrangements
related activities. He verifies the transactions executed by Islamic credit officer. He can either authorize or reject
the Transactions. The home page for Islamic credit manager in Model Bank has been designed slightly different
from other role-based home pages. All enquiries and transactions are accommodated in tabs and there are no
menu items in this home page.

5
Islamic Banking – Presales Demo Guide - Post R23 AMR

4.0 Demo Data

4.1 Islamic Customers

Following is the list of Islamic Customers. These customers are used for Islamic Operations:

4.2 Vendors

Following is the list of Vendors (Customers) involved in Islamic Operations:

6
Islamic Banking – Presales Demo Guide - Post R23 AMR

4.3 Brokers

Following is the list of Brokers (Customers) for handling Treasury related Islamic Operations:

4.4 Reviewers

Following is the list of Reviewers (Customers) involved in Review activities:

4.5 Asset Purchase Details

Below list of Asset purchase contracts are created for the Islamic Customers:

7
Islamic Banking – Presales Demo Guide - Post R23 AMR

4.6 Vendor Murabaha Finance Arrangements

Following Finance Arrangements are created for the Product Retail Murabaha:

8
Islamic Banking – Presales Demo Guide - Post R23 AMR

5.0 Single Customer View- Islamic Customer

This frame in the Single Customer view displays the basic Customer details including the photograph and
signature of the Islamic customers.

9
Islamic Banking – Presales Demo Guide - Post R23 AMR

6.0 List of Islamic Products Available in Model Bank

Following Islamic products available in Model Bank.

6.1 Accounts

Below Islamic account products are available in the Model Bank:

 Mudaraba Savings Accounts
 Mudaraba Daily Product Savings Accounts
 Mudaraba Savings Accounts – Monthly minimum
 Mudaraba Savings Accounts – Daily minimum

6.2 Deposits

Below Islamic deposit products are available in the Model Bank:

 Mudaraba Deposits
 Advance Profit Fixed Deposits
 Mudaraba Savings Plan
 Wakala Deposits

6.3 Facility

Below Islamic facility products are available in the Model Bank:

 Islamic Facility
o Mudaraba Facility

6.4 Finance

Below Islamic finance products are available in the Model Bank:

 Profit upfront sale
o Murabaha Finance
o Ijara Finance
o Commodity Murabaha Finance

 Profit accrual sale

o Forward Ijara Finance
o Diminishing Musharaka Finance
o Mudaraba Finance
o Musharaka Finance
o Qard Hassan Finance
o Bai-Salam Finance
o Construction Finance

 Multi-structured Product
o Wakala Finance
o Musawama Finance

10
Islamic Banking – Presales Demo Guide - Post R23 AMR

6.5 Profit Declaration for Mudaraba finance

The customer can declare the profit amount at the facility level (or) at the drawings level. The
IS.PAYMENT.DECLARATION application can be used to declare the actual profit amount.

7.0 Profit Distribution System

Profit distribution system (ID) module is used to distribute profit amount for Islamic deposits/ Islamic Accounts.
Profit Distribution System covers the mechanism used for calculation and distribution of profit by Islamic banks.

Banks can setup multiple pools, which is a combination of assets and liabilities to facilitate profit distribution for
each deposit and account linked to the Pool. The Pool Management helps the bank to manage funds by
accepting Deposits & Accounts and deploying funds appropriately for financing and investment, which helps in
Profit sharing among Customers and the Equity holders.

PDS has set of steps to calculate the Profit rate used for distribution to Mudaraba deposits/ Mudaraba savings
accounts and Wakala deposits. Calculation of Income and Expenses from the Finance contracts/ Arrangements
participating in Pool calculation and apply the reserves for distributable profit amount. Ability to simulate the
PDS calculation by setting up different parameter. Once satisfied the simulated record used to distribute profit
amount to the Deposit/ Account holders.

1) PDS Simulation: Net profit amount of the Pool is calculated from the Income/ expenses parameters
configured in the Pool parameter. Based upon the contribution made by Mudaraba deposits/ Mudaraba
Accounts/ Wakala deposits/ Shareholder equity by using weighted average balance the calculated net
profit amount is split. It is possible to add the average balance of Wakala deposits to the Shareholder
equity. The IRR%, PER%, Mudarib share% setup in ID.PDS.WEIGHT is used to reduce the split net
profit for each Deposit/ Account before arriving at the distributable profit amount. This profit amount is
converted into Profit rate.

2) Target Rate Update: User can amend the Profit rate calculated to match the market expectations. This
amendment results in recalculation of the distributable profit amount. It is possible to capture the Spread
rate and Special spread rate (or) Target rate can be updated by the user.

3) PDS Distribution: Once the profit rate is finalized it can be applied to the underlying Mudaraba
deposits/ Mudaraba accounts. Based upon the Profit pay method captured in Mudaraba deposits, profit
amount is paid to the Customer settlement account. For Mudaraba accounts profit amount is paid by
using profit distribution frequency setup in ID.POOL.PARAMETER. For Wakala deposits profit
adjustment accounting entries are generated based upon the configuration setup in Pool parameter.
IRR, PER and Mudarib share accounting entries are generated.

4) Reversal of PDS Distribution: The profit amounts distributed to customers by PDS can be reversed
on the same day or subsequent days for the last distribution if the bank may wish to. New Simulation,
Target Rate Update and PDS Distribution for the reversed PDS Distribution will reverse the accounting
entries generated for old PDS distribution and trigger adjustment accounting entries for the difference
in the profit amounts paid to Mudaraba Deposits/ Mudaraba Accounts.

11