Modified reverse salam product as an innovative alternative for mobilizing fixed deposits in jurisdictions with limited Sharia compliant investment avenues to promote financial inclusion
With the fintech (financial technology) solutions available in the market today, innovative ways to provide financial inclusion is needed. However, the most critical challenge in the arena is the limited availability of sharia-compliant investment avenues in some of the jurisdictions of the world where Islamic banking and finance has not yet fully taken off. The main objective of this research is to introduce a universally accepted mechanism using salam, one of the least used Islamic finance contracts in Islamic commercial banking for mobilizing fixed deposits. This will be ideal to be used in jurisdictions with limited sharia-compliant avenues. This is exploratory legal research that aims to provide an adequate and effective product for the jurisdictions that aspires to have a sophisticated fixed return guaranteed investment products structured in a sharia-compliant manner. Simultaneously, the proposed product in this research will serve the less privileged community of the society whose commodities can be used as an underlying asset in structuring the product. However, this social impact of the product will differ depending on the jurisdiction in which it is applied and the decision of the financial institution in which the product is offered as it is there discretionary power to choose the underlying commodity used in the transaction. Fintech can also be fused with the suggested product, and as such, the product can be easily used by the population in physically remote locations in a convenient manner.
Deposit , Financial inclusion , Fintech , Islamic finance , Salam , Sharia-compliance , Sharia
Muneeza, Aishath. (2019). Modified reverse salam product as an innovative alternative for mobilizing fixed deposits in jurisdictions with limited Sharia compliant investment avenues to promote financial inclusion. Al-Iqtishad, 11 (1), pp. 1-20.
Universiti Islam Negeri