An Islamic investment principle offers a balance between extreme capitalism and communism. It presents a conducive investment environment where individuals are free to produce and create wealth in anbenvironment not controlled by any human factor but divine guidance that sets moral standards and norms of character/behavior that seeks the utmost sincerity of intention. When these rules are abided by people in an internalized financial setting, peace and prosperity result for the general public.
It is upon these principles that the MERCO Bank Halal Investment is built. The concept of the Halal and Islamic Investment opportunity is to create a financial investment model which is based on mutual risk and reward sharing while avoiding payment and receipt of interest.
The Islamic law strictly prohibits people from investing in businesses that create a negative impact on society; these businesses are considered haram in the Islamic ethical code. Islamic investment rules and ethical structures avoid businesses that are into gambling, alcoholic liquor, nightclubs, pornography, pork, and such.
Mercobank Halal and Islamic Investment structure provide customers with various tangible asset-backed transactions which allow them to be profitable and also avoid Sub-prime or lagging securities and financial leverage from hybrid products, derivatives, and associated creative accounting practices.
The Halal Investment option also provides customers with implicit right of information on different ways their funds are being used and the nature as well as how the underlying assets are performing. Mercobank has always abided on its core value of transparency to customers which have earned the company the trust of thousands of investors that we currently serve.
Mercobank understands that building a trustworthy relationship with customers brings a level of comfort to our customers and through this transparent guarantee on the proper utilization of customers’ funds, Mercobank has now clearly been placed at an advantage in Islamic banking.
How Investors Can Earn Returns on Halal Investments
Islamic laws also clearly forbid banks from issuing loans that are interest-based. This principle has meant that so many banks become hesitant to issue loans to their customers who are Muslims. Our Halal investment option follows a zero-interest principle of which the profit and losses of every investment are shared by both the bank and the clients involved. This way the bank avoids the outright charge of interest in accordance with Islamic laws.
Mercobank also introduced three types of Halal investments that customers can make, and they include Capital Sukuk bonds, Ijarah, and halal equities.
Capital Sukuk bonds
The Capital Sukuk Bonds follow a Sukuk arrangement which is also a type of long-term loan bond. However, instead of the conventional loan arrangement which requires collaterals or certificates of guarantee and a periodic payment with interest, the Sukuk bonds opts for a more transparent profit and loss sharing arrangement where you would be allowed to own part of the asset and from there, gain from whatever the asset gains.
For Example, if you take a loan worth a $10 million bond to build a business at 10% for 10 years, you are obligated to pay the money with interest at the agreed tenor regardless of whether the business makes a profit or not. But a Sukuk investor (Like Mercobank) will get part payment of the $10 million every year with no interest, and we will only gain if the business makes money because Mercobank will own part of it. With this type of arrangement, both Mercobank and customers earn a fair allocation of returns
Fixed Income Fund (Ijarah arrangement)
This type of investment follows a rental income arrangement. Say you own a building or other asset, and you transfer the income rights to another party for a fixed fee over the duration. For example, you take money from Mercobank to build a rental home. In an Ijarah arrangement, Mercobank only earns from the fixed rental charge.
Mercobank also provides you with the Halal Equity investment arrangement to cater to your personal principles. Let’s say you personally don’t like cakes and don’t feel right investing in a cake business. Halal Equities will be there to cater to such principles. We ensure that only screened businesses get invested in.
How to set up a Halal Investment plan with Mercobank
Login and tap “Actions”
Select “Invest in Mutual Funds”
Choose your preferred halal fund
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