The Islamic Bank of Britain (IBB) is offering a new two-year fixed term deposit savings bond that pays an expected profit rate of four per cent.
As an Islamic Bank, the IBB does not pay interest to savers. Instead the rate of four per cent is offered to investors as an “expected profit rate” which deliver a profit over an agreed period, in this case 24 months.
If savers leave the quarterly profit invested with their full deposits they can expect to receive the full four per cent profit, if they elect to take out their quarterly profit as an income then the rate of return falls to 3.95 per cent.
The rate is open as long as investors hold their funds in the product for 24 months. The maximum investment is £100,000 per person and £200,000 per institution and the minimum investment is £1,000. No withdrawals or additional deposits are allowed to be made during the fixed term.
The launch of the product is timed to coincide with Ramadan and is available from 21st July to 19th August 2012.
As part of the agreement between the IBB and the investor, the IBB monitors its target profit rate on a daily basis to ensure it is on course to be reached. So far, the IBB has never failed to deliver its targeted profit.
The rate takes the product to the top of the best-buy tables for two-year fixed rate savings bonds.
A similar product was issued this time last year and proved to be very popular with people of all faiths.
The IBB is offering the product to Muslims and non-Muslims alike and the bank is authorised and regulated by the Financial Services Authority (FSA) and is a member of the Financial Services Compensation Scheme.
The IBB account is based on ethical principles and the bank is placed in the top ten of ethical account providers, according to Ethical Consumer magazine.