Section 6Sec./Art. 6

Powers of Islamic Banks.

(a) In addition to the general powers granted to corporations, Islamic banks shall have such powers as shall be necessary and prudent to carry out the business of a bank in accordance with Shariah principles.

(b) Islamic banks may perform the following banking services:

(1) Accept or create current accounts;

(2) Accept savings accounts for safekeeping or custody with no participation in profit and loss except unless otherwise authorized by the account holders to be invested;

(3) Accept investment accounts;

(4) Accept foreign currency deposits;

(5) Act as correspondent of banks and institutions to handle remittances or any fund transfers;

(6) Accept drafts and issue letters of credit or letters of guarantee, negotiate notes and bills of exchange and other evidence of indebtedness: Provided, That such financial instruments are in accordance with the principles of Shariah;

(7) Act as collection agent insofar as payment orders, bills of exchange or other commercial documents covering Shariah compliant transactions;

(8) Provide Shariah compliant financing contracts and structures;

(9) Handle storage operations for goods or commodity financing secured by warehouse receipts presented to the Islamic bank;

(10) Issue shares for the account of institutions and companies assisted by the Islamic bank in meeting subscription calls or augmenting their capital and/or fund requirements as may be allowed by law;

(11) Undertake various investments in all transactions allowed by Shariah principles; and

(12) Such other banking services as may be authorized by the Monetary Board.

(c) With prior Monetary Board approval, Islamic banks may issue investment participation certificates, sukuk, and other Shariah compliant funding instruments to be used by the Islamic banks in its operations or capital needs.

(d) Islamic banks may carry out financing and joint investment operations by way of mudarabah partnership, musharakah joint venture or by decreasing participation, murabahah purchasing on a cost-plus financing arrangement, lease (ijara) arrangements, construction and manufacture (istisnaa) arrangements, and other Shariah compliant contracts and structures, and to invest funds directly in various projects or through the use of funds whose owners desire to invest jointly with other resources available to the Islamic bank on a joint mudarabah basis in accordance with the foregoing arrangements, contracts and structures.

(e) With prior Monetary Board approval, Mamie banks may invest in equities of Shariah compliant undertakings that directly support the delivery of Islamic banking and financing services.

(f) Islamic-banks may exercise the general powers of a universal bank that are consistent with the principles of Shariah.