T24 for Islamic Banking

Overview
Temenos T24 (T24) is a complete front to back oce, CRM and product lifecycle management platform that powers
retail, corporate, wholesale, universal and private banking operations.
Running 24/7 and in real-time, T24 combines comprehensive business functionality with an advanced, secure, scalable and
modular architecture that future-proofs your banking operations to meet the infrastructure and market challenges of today
and tomorrow.
Consistently ranked as the leading core banking platform worldwide, Temenos T24is developed using a complete serviceoriented architecture (SOA) that is modular so it can be deployed and integrated to deliver the comprehensive functionality
needs of the bank.
Integrating seamlessly with existing banking systems, T24 enables ecient, secure, cost-eective and protable deployment
and control of a exible range of multi-channel, next generation banking services for the banks customers. T24 can be
implemented as a model bank version with built-in industry best practice processes, or as a highly congurable solution
that can be tailored to specic requirements.
Temenos is a recognized world leader in banking software technology with over 700 installations in over 125 countries, and
more than 50 installations in the Middle East, Asia, Africa and Europe for Islamic Banking. The Temenos core banking
solution, Temenos T24, supports Sharia compliance across the world.
Temenos T24 for Islamic Banking delivers real-time Islamic Banking services across a banks deposits nancing, treasury,
trade nance and investment operations, with built-in Sharia compliant workows. This enables banks to serve their
customers with total transparency and professional condence.

Temenos T24 for Islamic Banking

Designed specically for Islamic banks and
conventional banks oering Islamic nancial services,
Temenos T24 for Islamic Banking is both Sharia
-compliant and commercially exible.
It enables banks to oer a true range of the latest
competitive Islamic nancial products based on the award-

winning success of the Temenos T24 banking software

platform. Temenos T24 for Islamic Banking is a single core
banking software system that handles Islamic nancial
services together with non-Islamic ones. This helps banks
to maintain tight control over operational costs while
remaining focused on serving customers.

T24 for Islamic Banking

T24 for Islamic Banking functionality includes:

Istisnaa
Temenos T24 Istisnaa enables nancing of assets under construction. This allows the bank to order the
goods or equipment required for a construction project according to the choice of the client, including
delivery to the client. The client agrees to pay in instalments at specied dates. There are two sub-types of
Istisnaa contracts which are classied based on the construction period disbursements: planned
disbursements and unplanned disbursements.

Forward Ijarah
The Temenos T24 forward Ijarah contract allows the bank to nance assets under construction that will be
leased once completed. Temenos T24 manages asset details, disbursements and calculates prot during the
construction period. The bank can choose either to receive advance rentals during the construction period
or to collect the calculated prot once the Ijarah contract starts.

Financing Ijarah
Temenos T24 enables the bank to order the capital assets required for the customers rental agreement.
Temenos T24 manages asset purchase and leasing by the bank in addition to residual value calculation. At
the end of the term the bank can retain the asset and lease it again or sell it to the client. Temenos T24
manages all accounting entries including sale at the end of term.

Services Ijarah
Tememos T24 enables the bank to nance services provided by individuals or consultants in the form of a
Ijarah contract. In such contracts the prot amount is xed over the term of the lease. Temenos T24
converts the prot amount into a rate to manage accrual and prot recognition during the Ijarah term.

Murabaha
The Temenos T24 Murabaha contract revolves around the
banks purchase and onward sale of an asset. The
purchase may involve commodities, homes, real estate,
vehicles etc. The Bank makes a prot on the transaction,
which is the dierence between the price which it pays to
the supplier for the goods and the price at which it sells
the commodity to the customer. This mark-up is agreed
between the bank and the customer in advance. The

nanced amount and prot are due and payable on terms

agreed between the two parties.
The Sharia principles require that goods have to be
purchased and owned by the bank and therefore the bank
bears all the risks related to unforeseeable events (for
example, goods damage, war, customer bankruptcy) until
the goods are sold to the customer.

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Murabaha (LC) & Musharaka (LC)

The Temenos T24 Murabaha (LC) and Musharaka (LC) functionality is associated with the nancing of Letter
of Credits (LC) opened by customers. The Temenos T24 trade nance application automatically creates the
Islamic Murabaha and Musharaka contracts. LCs are opened in the name of the bank, and Islamic contracts
start on the day the payment is made to the exporter.
Temenos T24 maintains the amount shared between the bank and the customer in case of Musharaka, and
adjusts it with the contract amount based on the initial sharing. Temenos T24 applies the agreed prot
rate on the contract and accrues regularly on the contract. The application is fully integrated with Temenos
T24 limit processing, accounting and security features. It also allows various options on the repayments to
the contracts such as instalments (Bay Bithamin Ajil), payments or pre-closure.
Products include
Against LC corporate
Against inward documentary bills for collection
Hamish Jiddiyah
Against LC corporate
LC and drawings for purchase of goods
Against inward documentary bills for collection

Diminishing Musharaka
The Temenos T24 Musharaka contract is based on partnership, normally of a limited duration, formed to
nance an asset.
The bank enters into a partnership with a client in which both share the equity capital. Temenos T24
converts the share of each party into a number of units. When payments are received from the client, T24
manages the sale of units from bank to client until full ownership is transferred.

Mudaraba Investments
The Temenos T24 Mudaraba functionality enables customers to invest funds in Mudaraba transactions
which are invested by the bank using Islamic investments. The funds taken from the customer are given to
the dealers who make the necessary investments using all or part of the funds in one or more IS contract.
Products include:
Savings accounts

Current accounts
Investment deposits

Tawarruq
This product is designed for a bank customer to get an immediate liquidity facility applying Islamic Shari'a
rule. With this product the bank owns a position in precious metals or any asset which can be sold in the
market by the client. In Tawarruq procedure, a customer can keep his or her asset, or liquidate it to a
broker via the bank.
Products include:
Islamic personal nance
Islamic debt take-over
Islamic mezzanine nance
Islamic clean facility
Top-up facility
Islamic credit card
Islamic covered drawings
Mezzanine contracts

Bulk Commodity Trading

Temenos T24 supports bulk commodity trading for treasury operations or Islamic credit cards nancing.
Bank treasury dealers can buy commodity in bulk quantities. Temenos T24 Islamic Banking manages
inventories and sale of those commodities, in addition to broker dealings.

Sukuk
Sukuk are securities. In practice most have so far been similar to bonds or mortgage backed securities
(MBS), usually oating rate based. Just as securities could have an equity prole, xed-income or hybrid,
Sukuk may also have similar proles.

Wakala
The customer deposits money with the bank and appoints the bank as agent. The bank can invest this
money and generate prot. The prot given to the customer is pre-agreed and this can be modied later
based on pools calculation. The bank has the right to adjust the prot percentage or collect early maturity
fees.

Hajj Financing
Temenos T24 Islamic Banking provides lending to pilgrims who wish to attend the Hajj. The nancing is
prot free and can be repaid in instalments or as a single repayment. To support such lending, a
documentary evidence workow can be provided.

Qard Hassan
This prot free nancing method is given to customers on a hardship and/or charitable basis and is normally
sourced from the banks own funds. Automated charges relating to the nancing can be added and
documentary evidence workow if required is supported.

Commodity Murabaha
In a Temenos T24 Commodity Murabaha contract, the bank buys a specic commodity from international
markets based on the agreement with their clients.
The quantity and the purchase price of the commodity is agreed with the client. The bank sells these
commodities on behalf of its client, with deferred prot and principal payment at maturity. T24 Islamic
Banking covers the full workow of commodity Murabaha and deals with dierent commodity brokers with
full straight through processing. All accounting entries, broker commissions and print outs are be
automated.

Reverse Murabaha
In a Temenos T24 reverse Murabaha contract, the client applies to invest in commodity trading. The bank
purchases the commodity for its customer from the international markets with a deferred prot percentage
in a deferred payment date. The bank sells purchased commodities from the customer to another broker in
the international / local market.
Temenos T24 Islamic Banking covers the full workow of reverse Murabaha and deals with dierent
commodity brokers. All accounting entries, broker commissions and print outs are automated.

Islamic Derivatives
With recent widespread acceptance of Islamic derivatives products, Temenos T24 Islamic Banking is the
leading Sharia compliant platform in this market. Products supported include Islamic FX forwards under
promissory contracts, prot rate swaps, and Islamic cross currency swaps.

Current Accounts
Temenos T24 accounts are Sharia compliant with no Riba, including prevention of a debit balance situation.
All other features associated with a current account are available. Charges for services provided can be
automated or applied manually.

Prot Distribution
Temenos T24 prot distribution application is driven by a set of parameters that allow the users to create
multiple pools, grouping assets and liabilities to distribute the prot generated from those assets to
liabilities in the same pool and based on a set or parameters.
The system allows users to set the rules and conditions for payment and gives the user a result on a what if
scenario before making the payments. The user can do many trials by changing the rules and payable rate
until the nal result is approved, and then make the nal posting of the prots. The prot can be paid online
and Temenos T24 generates all needed reports and notications, then posting all accounting entries.

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