Islamic banking on Oracle FLEXCUBE, set up so the Sharia board can trace every posting.
Islamic financing and deposit products, profit distribution and accounting in the core you already run, as a full Islamic bank or as an Islamic window next to the conventional book.
- Financing
- Murabaha, Ijarah, Istisna, Mudarabah, Musharakah
- Deposits
- Mudarabah pools with profit distribution
- Model
- Islamic bank or Islamic window
Where Islamic banking projects slip
FLEXCUBE ships Islamic financing, origination and deposit functions. The harder part is making each contract follow the structure the Sharia board approved: the bank buys the asset before it sells it in a Murabaha, owns and maintains it in an Ijarah, pays in stages in an Istisna. One product parameter set the wrong way books income the board will reject.
The second risk is profit distribution on Mudarabah deposit pools. Pool definitions, weightages and reserves produce the numbers customers see every month, and they have to reconcile with the general ledger.
We start with product mapping and accounting, and the Sharia board reviews the work from the first workshop, not at UAT.
Five contracts, five different money flows
Pick a contract to see who owns what, in which order, and what the Sharia board checks before FLEXCUBE books it.
Cost-plus sale: the bank buys the asset, then sells it to the customer at an agreed markup.
- 1Customer → BankThe customer asks the bank to finance an asset and promises to buy it.
- 2Bank → SupplierThe bank buys the asset and owns it.
- 3Bank → CustomerThe bank sells it at cost plus the agreed markup. The price is fixed at signing.
- 4Customer → BankThe customer pays in instalments.
Financing product, profit schedule and accounting events, with the asset purchase booked before the sale.
The bank owns the asset before it sells it. The price never changes after signing.
What each contract means for the core
| Contract | Who owns the asset | Bank’s income | Schedule in FLEXCUBE | What the board checks |
|---|---|---|---|---|
| Murabaha | Bank, until the sale | Markup on a sale, fixed at signing | Instalments of a fixed price | The bank owns the asset before it sells it. The price never changes after signing. |
| Ijarah | Bank, for the lease term | Rental for the use of an asset | Rentals, optional transfer at the end | Ownership risk stays with the bank during the lease. |
| Istisna | Manufacturer, then bank, then customer | Margin between the two Istisna contracts | Staged payments, then repayments | Specification, price and delivery date are fixed in the contract. |
| Mudarabah | Depositors’ capital, managed by the bank | A share of actual profit, never a guaranteed return | Profit distribution per period | The ratio is agreed upfront and no return is guaranteed. |
| Musharakah | Bank and customer, by share | A share of the venture’s profit | Buy-out units, rental on the bank’s share | Losses follow the capital share, whatever the profit ratio. |
One core, two books
From pool income to each depositor’s account
- Pool incomeReturns from the financing the pool funds
- Net of expensesDirect pool expenses deducted
- Split by ratioBank as mudarib and depositors, agreed upfront
- WeightagesBy tenor, amount and deposit type
- Each accountCredited and reconciled to the GL
How a Mudarabah pool shares its profit
Move the ratio and the weightage to see how one period’s pool profit reaches each deposit type.
Example pool: 12-month deposits 400 000, 6-month deposits 300 000, savings 300 000.
Illustrative numbers. Pools, ratios and weightages are set by the bank and approved by its Sharia board.
How we run an Islamic banking implementation
Five stages. The Sharia board signs off at the end of the first and the fourth.
- ◆ Sign-off 1Product mappingEach approved structure mapped to a FLEXCUBE product, its events and its accounting entries.
- ReviewDesignFund separation, pools, profit rules, late payments to charity, reporting.
- BuildConfigure and extendProducts, schedules, origination, interfaces. Extensions stay upgrade-safe.
- ◆ Sign-off 2Test evidenceFull lifecycle per product and several profit distribution runs, reconciled.
- RunGo liveFirst distribution run in parallel, hypercare, then SLA support.
When this page is for you
- The bank plans to open an Islamic window or convert a subsidiary to Islamic banking.
- The central bank has issued or updated Islamic banking rules.
- Islamic products run in spreadsheets or in a satellite system next to FLEXCUBE.
- Profit distribution is calculated outside the core and reconciled by hand every month.
- Sharia audit findings point to product accounting or late-payment handling.
What the bank gets
- A product mapping matrix signed by the Sharia board
- Accounting entries for every product event, agreed with finance
- Profit distribution rules with a reconciliation to the GL
- A test evidence pack per product for Sharia review
- A runbook for the monthly profit distribution cycle
After go-live
The team that configured the products supports them: SLA-based L1, L2 and L3 support, including month-end profit distribution runs.
Frequently asked questions
More FLEXCUBE services
Start with the product mapping.
A fixed-scope assessment maps your approved Islamic products to FLEXCUBE, shows what is configuration and what needs an extension, and gives an estimate both the Sharia board and IT can sign.