Term Deposit Account Conversion Frequently Asked Questions

Size: px

Start display at page:

Download "Term Deposit Account Conversion Frequently Asked Questions"

Imogen Jacobs
6 years ago
Views:

1 Term Deposit Account Conversion Frequently Asked Questions Q1: What is IFSA 2013? Islamic Financial Services Act (IFSA) 2013 is an Act that regulates and supervises Islamic financial institutions in order to promote financial stability, ensure compliance with Shariah and also for any related, consequential or incidental matter. The Act introduces two major classifications of products for the acceptance of money from customers by Islamic banks into either Islamic deposits or investment accounts. Under the new definition, all term deposit products which apply the Shariah contract of Mudarabah (profit sharing) and Wakalah bi al-istithmar (agency for investment) will be classified as investment products instead of deposits. Hence, the benefits and privileges of being deposits products will no longer be applicable e.g. Perlindungan Insurans Deposit Malaysia (PIDM) coverage. Q2: Why is conversion required? All Islamic banks will embark on a conversion exercise to reclassify Islamic deposits as defined under the IFSA For AmBank Islamic, effective 15 August 2014, any existing term deposit products based on Shariah contract of Mudarabah and Wakalah bi al-istithmar ( Existing Deposit ) will be converted to the new term deposit products based on Shariah contract of Commodity Murabahah (sale of commodity on cost-plus profit) upon maturity of the Existing Deposit. Nearing the deadline of the Bank Negara Malaysia (BNM) IFSA Transition Plan, AmBank Islamic will embark on another conversion exercise to convert all the remaining Existing Deposit with maturity after 30 June 2015 to new term deposit under Commodity Murabahah contract. Q3: When is the conversion date? Regardless of your accounts maturity date, the conversion of all existing term deposit under Mudarabah and Wakalah bi al-istithmar contract to Commodity Murabahah contract is scheduled to be carried out in phases from 8. Q4: Who will be impacted when conversion takes place? All existing customers (individual & non individual) who have placements under Mudarabah and Wakalah bi al-istithmar will be impacted. Q5: What are the Existing Deposit products that will be involved in this conversion? 1. General Investment Account-i Afdhal Investment Account-i 4. Am50Plus Investment Account-i 5. AmQuantum Investment Account-i 6. ValuePlus Investment Account-i Q6: What are the new term deposit products? The new Islamic term deposit products are Shariah compliant term deposit based on Commodity Murabahah contract via Tawarruq arrangement whereby commodities shall be used as the underlying asset for the purchase and sale transactions between customer, bank and commodity trader(s) via approved commodity trading platform(s). Under the arrangement, you will appoint AmBank Islamic as

2 your agent for the purchase and sale of the commodity. The trading of commodities enables you to enjoy fixed profit rate and at the same time, your deposit is guaranteed by PIDM. The new term deposit products are: Afdhal 3. Am50Plus 4. AmQuantum 5. ValuePlus Q7: How is the mapping of Existing Deposit to new term deposit under the conversion? Existing New General Investment Account-i Afdhal Investment Account-i Afdhal Am50Plus Investment Account-i Am50Plus AmQuantum Investment Account-i AmQuantum ValuePlus Investment Account-i ValuePlus Q8: What are the benefits of the new term deposit accounts? Account Afdhal Am50Plus AmQuantum ValuePlus Unique features Low initial placement of RM1,000 for 1 month tenure with partial withdrawal features Short and flexible tenures in number of days with partial withdrawal features Specially designed for senior citizens with monthly profits crediting into savings or current account Long term deposit with quarterly profit crediting into savings or current account Provides a higher rate on and bundled with Islamic unit trust investment Q9: What will happen to my Existing Deposit upon its conversion? Based on the mapping table above (Q7), your Existing Deposit will be converted to the respective new term deposit account accordingly. The Existing Deposit with maturity date of 1 July 2015 onwards, will be converted to the new term deposit between 8 to 19 June Except for the change in Shariah contract, other terms i.e. principal amount, maturity date, account number etc. shall remain unchanged. For easy reference, please refer to the following illustration: Existing Account Details Principal: RM10,000 Tenure: 24 month s Value Date: 31/03/ /3/2016 Profit Rate: Expected Profit Rate Converted Account Details Principal: RM10,000 Tenure: 24 month s Value Date: 31/03/ /03/2016

3 Existing Account Details General Investment Account-i (GIA-i) Principal: RM20,000 Renewal Instruction: Principal only Converted Account Details Principal: RM20,000 Renewal Instruction: Principal only Afdhal Investment Account-i Principal: RM30,000 Tenure: 731 days (24 months) Value Date: 1/4/2014 1/4/2016 Afdhal Principal: RM30,000 Tenure: 731 days (24 months) Value Date: 1/4/2014 1/4/2016 Am50Plus Investment Account-i Principal: RM40,000 Renewal Instruction: Principal only. Profit to be credited into Savings Account Am50Plus Principal: RM40,000 Renewal Instruction: Principal only. Profit to be credited into Savings Account AmQuantum Investment Account-i Principal: RM50,000 Tenure: 18 months Value Date: 31/3/ /9/2015 Renewal Instruction: Principal only. Profit to be credited into Current Account AmQuantum Principal: RM50,000 Tenure: 18 months Value Date: 31/3/2014 1/9/2015 Renewal Instruction: Principal only. Profit to be credited into Current Account Q10: How is the profit calculation structured upon conversion? Example 1 Principal: RM10,000 Tenure: 24 Months Value date: 10/3/ /3/2016 Expected Profit upon maturity for (10/3/ /3/2016): Principal x Expected Profit Rate x Tenure RM10,000 x 3.30% x 24/12 = RM660 Profit calculation structure due to conversion from to Term Deposit-i (Conversion date is on 10/6/2015) Profit calculation for (10/3/2014 9/6/2015): Principal x Expected Profit Rate x Tenure RM10,000 x 3.30% x 15/12 = RM Profit calculation for (10/6/15 10/3/2016) Principal x Fixed Profit Rate x Tenure RM10,000 x 3.30% x 9/12 = RM Total profit: RM660

4 Example 2 AmQuantum Investment Account-i Principal: RM10,000 Tenure: 24 Months Value date: 15/3/ /3/2016 Conversion date: 15/6/2015 Indicative Profit upon maturity for AmQuantum Investment Account-i (15/3/ /3/2016): Principal x Indicative Rate of Return (based on Profit Sharing Ratio) x Tenure RM10,000 x 3.47% x 24/12 = RM694 Profit calculation structure due to conversion from AmQuantum Investment Account-i to AmQuantum (Conversion date is on 15/6/2015) Profit calculation for AmQuantum Investment Account-i (15/3/ /6/2015): Principal x Indicative Rate of Return (based on Profit Sharing Ratio) x Tenure RM10,000 x 3.47% x 15/12 = RM Profit calculation for AmQuantum (15/6/15 15/3/2016) Principal x Fixed Profit Rate x Tenure RM10,000 x 3.47% x 9/12 = RM Total profit: RM694 Q11: When my account is converted into the new term deposit, will I still enjoy the benefits that I have been enjoying before? Yes, you will. The main difference is fixed profit rate will be given instead of profit based on Profit Sharing Ratio (P.S.R.) or Expected Profit Rate (E.P.R.) Q12: If it can give fixed return, isn t it similar to Conventional Fixed Deposit? What is the difference, then? Conventional Fixed Deposit is based on interest whereas the New Islamic Term Deposit is a Shariah compliant term deposit based on the concept of Commodity Murabahah which provides fixed return to customers. These returns are derived through the trading of Shariah compliant commodities as the underlying asset. Q13: Why do I need to convert my accounts to these new products? Eventually, all existing deposit accounts based on Shariah contract of Mudarabah and Wakalah bi alistithmar will no longer be under deposit. Instead, these will be re-classified as investment accounts. The conversion to these new products is required to ensure your account remains as deposit in order for it to continue to be eligible for protection by PIDM. Apart from complying with regulatory requirement, our new term deposit products also offer better benefits compared to the existing term deposit e.g. upfront fixed profit and availability of partial withdrawal features for which is also enjoyed by existing GIA-i accountholders. Q14: What will happen to my Existing Deposit if I do not wish for it to be converted? Should you not wish to convert your Existing Deposit, you may proceed to your nearest AmBank Islamic / AmBank branches to perform early withdrawal of your account. You may then deposit your funds into other deposit products i.e. savings account or current account. Q15: Do I still get the PIDM coverage under these new products? Yes, you will continue to enjoy PIDM coverage of RM250,000 per depositor per member bank/entity.

5 Q16: Does this conversion involve issuance of new Term Deposit certificate? There is no necessity for you to have your certificate reissued upon its conversion as except for the change in Shariah contract, other terms i.e. principal amount, maturity date, account number etc. shall remain unchanged. Q17: What will happen if I have lost my existing certificate? If the certificate is lost, you must immediately notify AmBank Islamic / AmBank in writing as per the existing procedure. Q18: Does company / corporate customer need to issue new Board Resolution to convert the Existing Deposit placement to this New Term Deposit product? No. New Board Resolution is not required for the conversion to take place. Q19: Can company / corporate customer continue to enjoy the special rate for fresh placements? Yes, on a case to case basis as per current practice. Q20: How would the conversion impact my Existing Deposit under lien? Any existing lien, rights, charge, security interest and/or restrictions applicable to the Existing Deposit shall continue under your new term deposit(s) based on Commodity Murabahah. Q21: Can customer withdraw the deposits under lien? Deposits under lien are governed by the terms and conditions of the financing facilities granted to you by the bank. As such, you will need to seek further advice from your account Relationship Manager (RM).

Business Day means a day on which Bursa Malaysia is open for trading.

Business Day means a day on which Bursa Malaysia is open for trading. Terms and conditions AmBank (M) Berhad and AmBank Islamic Berhad: Bundle Campaign Campaign Period: 1 July 2018 to 30 September 2018 1. Definition For the purpose of this terms and conditions, the following