Islamic Banking Solution

ITS has been the leading ICT solutions provider and systems integrator for Islamic Banks and Islamic Finance organizations since 1998. ITS’s pre-integrated solution is designed speci�cally to meet the needs of the Islamic banking and Islamic �nancing sector; taking into consideration the great importance of the Islamic Shariah in the community’s �nancial dealings. To that end, our products are fully Shariah-compliant and easy to use,with simple interfaces. In addition, ITS has a keen understanding of what our customers really need from an ICT partner to enable technology utilization in order to grow your business.

ITS has realized the importance of the Islamic banking �eld, and how dynamic the industry is, and identi�ed the subsequent changes in central bank’s rules. Based on that, ITS Islamic Banking Solution has been developed to comply with multiple Islamic rules, taking into consideration the central bank rules.

The system is compliant with:• The Accounting and Auditing Organization For Islamic• Financial Institution (AAOIFI)• Middle East Rules• Central Bank of Kuwait• Central Bank of United Arab of Emirates• Central Bank of Qatar• Bahrain Monetary Agent• Liban Bank• Far East rules• Malaysia Rules

ITS Islamic Banking Solution is compliant and integrat-edwith Bank Negara Systems & Reporting: RENTAS, SWIFT, E-PEN-TAS, FISS, Inward Clearing Checks, ITEPS/IT IS, Black List, ATM & CMS Report, and others.

ITS Islamic Banking solution follows the rules laid down by Shariah, the Islamic law which dictates the activities of banks as well as the basic foundation of livelihood of the citizens of Islamic countries. ITS appreciates the unique structure of Islamic Banking as well as the di�erences between Islamic Banking and conventional loan or debt markets. ITS Islamic Banking Solutionallows Islamic banks to provide a competitive range of alternative �nancing vehicles, alternative to �nancial products o�ered by commercial banks while, remaining �rmly rooted in Islamic principles. Islamic Banking Solution also allows conventional banks to employ Islamic Financial techniques in their banking,thus giving a Profit/Sharing framework as an alternative to interest rate mechanism.

The System Functional Features are as follows:Functionality: Our Islamic Banking Solution provides acomprehensive range of functionalities to undertake retail and corporate-based business transactions in a Shariah compliant manner. This includes processing a deal containing more than one asset that is �nanced through the use of more than oneIslamic Instrument.

Flexibility in de�ning Islamic Instruments: ITS IslamicBanking Solution provides the power of Islamic Instrument Definition Engine (IIDE) that facilitate �nance houses and banks to innovate and develop Islamic Business Models relevant to the business lines, in order to meet the requirements of the market in an e�cient and timely manner.

Flexibility in Defining Islamic Financing Products: ITSIslamic Banking Solution energizes product management by developing new products in minutes, and can easily adapt to the business line and the strategy set by the management.

Our Experience

Islamic Compliance

Products Features

Coverage: ITS Islamic Banking Solution delivers a unique and rich set of Islamic �nance transactions that is integrated with Work�ow Management System (WMS) which provides a wider range of business work�ow capabilities in a very smooth and user-friendly manner.

Scalability: ITS Islamic Banking Solution consists of a highly scalable system that has the capability to process transactions ranging from a few hundred to millions across small, medium, and large-size business entities. The scalability feature ensures the institution that the Islamic �nance system will be capable of meeting the growth and expansion requirementsof the companies without impacting the performance and regular business activities.

Marketing: ITS Islamic Banking Solution is customer-centric; providing a clear and single view of the customer pro�le.

Access: ITS Islamic Banking Solution captures, manages, and maintains central information related to the �nancing deals such as deal information, �nancial accounting transactions, suppliers, guarantors, �nanced assets, insurance details, credit scoring, andother relevant information.

Multi-currency support: ITS Islamic Banking Solutionhas the capability to process �nancing deals denominated in any foreign currency. To accommodate the purpose, Islamic Banking Solution captures and regularly updates FOREX rates received from the Integrated Treasury Application or Core Banking System.

Reporting & Documentation: ITS Islamic Banking Solution has a wide range of built-in reports, forms, and contracts. In addition, Islamic Banking Solution also o�ers the �exibility to add and modify the existing reports dynamically, without requiring a high level of ITknowledge. In addition to the existing reports, the system central-data information is accessible through any standard reporting database tool.

Multi-language support: ITS Islamic Banking Solution is fully Arabic / English enabled and can support any other languages supported by Windows Operating System. All the screens, forms, contracts, vouchers,reports, are multilingual and are generated automatically as per the client’s preferred language.

Deal Setup

Finance Information

Instrument Details Instrument Setup

Integration: ITS Islamic Banking Solution can be integrated to an existing core banking system in the case of banks or ERP system in the case of �nancial institutions.

Transaction Steps ManagementITS Islamic Banking Solution provides facility to your organization to customize the operational based transaction steps in the manner required by business circumstances. However, Islamic Banking Solution does not allow user modi�cations in the Shariah based steps. In addition, Islamic Banking Solution also provides facility to add user-de�ned steps under both the operational and Shariah categories.

General Features

Islamic Banking SystemBusiness Architecture

The Islamic Instruments De�nition Engine (IIDE)(1) Islamic �nancing, investment modes de�nition(2) Islamic Instruments de�nition engine(3) Islamic banking products de�nition engine

Core Banking System ERP Fund Management CIF

The Reference Instruments(1) Morabaha / Mosawama(2) Istisnaa / Parallel Istisnaa(3) Ejara LTO / Operational(4) Tawarok(5) Qarad Hasan(6) Bai Salam(7) Parallel Bai Salam

The Supporting Functions(1) Customer Services(2) Payment / Collections(3) Real estate functions(4) Charges / Fees collections(5) Fund source module

Business Logic / Middle Tier

(1) Islamic Instruments steps sequencing engine(2) Islamic accounting generator engine(3) Islamic supporting functions engine(4) Islamic banking products de�nition engine(5) Islamic Pro�t Calculation / Distribution(6) Guarantees / Guarantor(7) Collaterals

External / Third Party Application Adapters

Supporting Systems

Loans CRS GL & Accounting Treasury Work Flow

(8) Security & Administration(9) Field validation business roles(10) Screen Validation business roles(11) Reporting engine

ITS Islamic Banking Solution’s credit scoring tool enables the user to compute a compr hensive credit score of the customer to determine the re-payment capacity. This function is based on an algorithm using parameterized weights that depend on the user-de�ned parameters like customer information, salary, social position, year of relationship with bank, existing liabilities with other banks, past defaults, etc.

Credit Scoring Facility

What-If Analysis

ITS Islamic Banking Solution provides a more powerful �nancial tool for decision making purposes known as ‘What-If Analysis’. This tool enables you to compute deal payment/repayment plans, using internal rate of return (IRR & XIRR), pro�t rate (PR) and annual percentage rate (APR) based on �nancing scenarios given by the applicant. This service o�ers various alternatives for customers to choose from, and triggers a new deal with the stored information when conducting the What-If Analysis. In the What-If process, a salesperson can help the customer �nd his best-�tting deal speci�cations, starting from the selling price, passing by down-payment amount, balloon amount, installments amount, and reaching the most appropriate payments schedule that can �t the customer’s requirements.

Running Inquiries

ITS Islamic Banking Solution enables you to conduct real time inquiries about any transactions, deals, and accounts while processing a deal. To name some of the available inquiries:

• User-specific Applications• All Applications• Instalments• Customer Previous Deals• Financial Accounts• Blacklisted Customers• Customer Statements• Inventory Items• Customer’s RIM Portfolio• Group limit Inquiry• Facility limit• Guarantor Information• Commitment Tree• Relationship

Back-end Support

ITS Islamic Banking Solution is fully integrated with ITS Core Banking component as the back-end transaction processing application. The core banking component serves as the back-bone for hosting the following features and functionalities for Islamic Banking Solution:

• Customer Information Management - this feature allows the addition and management of customer information, giving a 360 vision of the customer’s behavior within the organization.

• Bank General Ledger - this feature allows the establishment and management of GL Chart of Accounts according to bank requirements and supports all traditional �nancial accounting functions (balance sheet and pro�t & loss reporting, budgeting, cost centre accounting, and executive analysis, among others). Moreover, ITS Islamic Banking Solution has the capability to be con�gured to integrate with any back-end system.

Fees & Charges

ITS Islamic Banking Solution allows the bank / institute to pre-de�ne a list of fees and charges on the system and product level, which shall be processed, booked, and collected during the life cycle of the deal. Mor over, ITS Islamic Banking Solution provides the following options relating to the charging methods, regarding fees and charges:• Include all or partial amount of fee amount as part of �nancing• Add all or partial amount of fee amount to the deal repayment value• Charge and collect fee amount separately as lump sum amount or collect amount in instalments

Managing Customers Credit Limit

ITS Islamic Banking Solution allows you to establish and manage credit line facility (commitments) of the customers:• Set up credit line limit• Credit line limit approval and process• Set up commitment under the credit line• Approval and process of the commitment• Increase / Decrease commitment contract• Increase / Decrease commitment balance• Update commitment, and• Processing draw downs under the dedicated credit line

Documents management

allows de�nition and maintenance of document templates such as contracts & agreements, purchase orders, delivery notes, construction orders, payme nt bills, reminders, dunning letters, etc.• Documents printing service – allows printing of contracts, agreements, reminders, bills, and other transactional documents at the appropriate time during the deal life cycle.

Rich Work�ow

ITS Islamic Banking Solution has a comprehensive work�ow system whereby the application is forwarded automatically to a Credit Appraisal Officer for review and recommendation. A complete work flow can be designed depending on the bank’s policy, access privileges, and di�erent levels of authorization. The applications can be reviewed against the pre-established customer credit acceptance criteria and then forwarded to the appropriate Credit Manager or Credit Committee for final decision (approval / rejection).

Comprehensive Application Security

ITS Islamic Banking Solution provides increased control on all the information through comprehensive access rights along with a comprehensive transactions limit, and a very rich multiple-level authorization mechanism.ITS Islamic Banking Solution includes a strong security system that enables you to:• Assign privileges and permissions to user groups• Encrypt user passwords on screen and in database

Deal Tracking Facility

This facility is a major tool for the �nancial institution’spolicy �ne-tuners, business process managers and implementers, auditors, and operation managers. It logs every deal in the database keeping records of date, time, action name, and the responsible person of that action for every step in the deal process. Application tracking helps monitor deals at all stages, explore problems or mistakes in the work�ow, and �nd out about the bottlenecks of the deals-�ow.

Multilingual

ITS Islamic Banking Solution is a multilingual solution.It fully supports English and Arabic languages (screens, messages, advices, contracts, reports, etc.).

Foreign Currency Deals

ITS Islamic Banking Solution supports deals denominated in any foreign currency that the bank desires to have, as per bank credit and �nancing policy.

Other Utility Services Islamic Banking Solution provides a number of utility services such as:• Profit Matrix - Provides a fully parameterized tool for defining profit matrix accommodating fixed and variable rates depending on the requirements of your o�ered products in the market.• Transaction reviews – Provides facility to include transaction reviews by supervisors and managers in the form of comments and an additional text field for notes and actions.

Wide Range of Islamic Financing Instruments

ITS Islamic Banking Solution provides a wide range of, but not limited to, Islamic financing instruments that work as Islamic modes or mechanisms of providing asset based and cash based financing to both the retail and corporate sector of the market.Islamic Banking Solution groups these instruments under following types of facilities:

Al-Wadiah (savings with guarantee)

Refers to goods or deposits, which have been deposited with another person, who is not the owner, for safekeeping.

As Wadiah is a trust, the depository becomes the guarantor and, therefore guarantees repayment of the whole amount of the deposits, or any part thereof, outstanding in the account of depositors, when demanded. The depositors are not entitled toany share of the profits but the depository may provide returns to the depositors as a token of appreciation.

Al-Mudharabah (pro�t-sharing)

Refers to an agreement made between a party, that provides the capital and another party (entrepreneur), to enable the entrepreneur to carry out business projects, which will be on a profit-sharing basis, according to pre-determined ratios agreed upon earlier. In the case of losses, the losses are borne by the provider of the funds.

Bai’ Bithaman Ajil (deferred payment sale)

Refers to the sale of goods on a deferred payment basis at a price, which includes a profit margin agreed upon by both parties.

Al-Musharakah (joint venture)

Refers to a partnership or joint venture for a specific business with a profit motive, whereby the distribu-tion of profits will be apportioned according to an agreed ratio. In the event oflosses, both parties will share the losses on the basis of their equity participation.

Al-Murabahah (cost plus)

Refers to the sale of goods at a price, which includes aprofit margin as agreed upon by both parties. Such sales contract is valid on the condition that the price, other costs, and the profit margin of the seller are stated at the time of the agreement of sale.

Bai’ al-Dayn (debt trading)

Refers to debt financing, i.e. the provision of financialresources required for production, commerce, and services by way of sale/purchase of trade documents and papers. Only documents evidencing real debts arising from bona fide merchant transactions can be traded.

Refers to two contracts undertaken and subsequently as follows:

Al-Ijarah Thumma al-Bai’ (leasing and subsequently purchase)

i. Al-Ijarah contract (leasing/renting); andii. Al-Bai contract (purchase).Under the first contract, the hirer leases the goods from the owner at an agreed rental over a specified period. Upon expiry of the leasing period, the hirer enters into a second contract to purchase the goods from the owner at an agreed price.

Al-Ijarah (leasing)

Refers to an arrangement under which the leaser leases equipment, building, or other facility to a client at an agreed rental against a fixed charge, as agreed upon by both parties.

Qard Hassan (benevolent loan)

Refers to an interest free loan. The borrower is only required to repay the principal amount borrowed, but he may pay an extra amount at his absolute discretion, as a token of appreciation.

Bai Salam (future delivery)

Refers to an agreement whereby payment is made immediately while the goods are delivered at an agreed on later date. It is equivalent to an advance payment.

Bai Istijrar (supply contract)

Refers to an agreement between the client and the supplier, whereby the supplier agrees to supply a particular product on an on-going basis, for example monthly, at an agreed price and on the basis of an agreed mode of payment.

Kafalah (guarantee)

Refers to guarantee provided by a person to the owner of goods, who has placed or deposited his goods with a third party, whereby the guarantor and the third party must meet any subsequent claim by the owner for his goods.

Rahn (collateralized borrowing)

Refers to an arrangement whereby a valuable asset is placed as collateral for debt. The collateral may be disposed of in the event of default.

Wakalah (nominating another person to act)

Refers to a situation, where a person nominates another person to act on his behalf.

Hiwalah (remittance)

Refers to a transfer of funds/debt from the depositor’s/debtor’s account to the receiver’s/creditor’s accountwhereby a commission may be charged for such service.

Al-Sarf (foreign exchange)

Refers to the buying and selling of foreign currencies.

Al-Ujr (fee)

Refers to commissions or fees charged for services.

Al-Hibah (gift)

Refers to gifts award voluntarily in return for loan given

Islamic Retail & Investment Solutions

Customer & Market Customer & Market Access Modes of Financing Modes of Funding

Financing Product De�nition Eng

Customer Information Management

What If – Analysis Tool / Credit Sco

Deal Processing

Deal Payments Rescheduling

Liability Transfer

Postponing Installments

Early Settlements

Deal Collections

slamic Instrument De�nition Eng

Income / Pro�t Recognition

Guarantee / Collateral Control

Debt Serving

Early Payment Rebatesa

Business Operation Management and Support

Core Business Operations

Lesse Operation

Business Resources Management

First Management

Financial Resources Management

General Ledger

BASEL Compliance

Regulatory Compliance

Banks Own Capatial Resources

Managed Investment Funds

Parallel or Back to Back Financing

Financing Operation

Inventory Management

Accounts

Investment Operations

Real Estate Management

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