In this learning unit, we will understand the Qard Hasan finance product & the

workflow involved.
The Course Objective is to equip participants with adequate knowledge on the Qard
Hasan finance product.
 Qard Hassan is a profit free loan. A sum of money is financed and is recovered from
the client without any amount over and above the finance amount.
The purpose of Qard Hasan is to help and support the poor or people who are in
need of finance to overcome financial difficulties and to fulfill the short-term needs
of the client.

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 Qard Hasan workflow is explained here.

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 Finance to customer is done in AA

The details of customer , currency , IS.Product are captured initially

Details such as commitment amount, term or maturity date, payment schedules are
defined here for the finance.

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 For Qard Hasan, usually the Profit amount or percentage is Zero.

Another option is to include a profit amount or percentage with a cooling period. If

the finance is settled by customer well within the cooling period defined, banks can
waive the profit stated. In this case, the bonus percentage should be set to 100.

Upon authorization of finance, accounting entries are generated.

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 In this workshop, we will open a Qard Hasan contract with the details as per slide.

T24 Basic Set up Tables for Islamic Banking -

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 Navigation to open a contract is shown here.

T24 Basic Set up Tables for Islamic Banking -

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 Customer, IS.Product, date, currency to be input.

T24 Basic Set up Tables for Islamic Banking -

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 Commitment amount , term or maturity to be input.
Profit is set to 0.
Settlement accounts for disbursement & repayment to be included.

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 Navigation to authorise the finance is shown.

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T24 Basic Set up Tables for Islamic Banking -
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 Payment schedule & accounting entries of the contract shown.
As per schedule repayment is done only for the principal.

T24 Basic Set up Tables for Islamic Banking -

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 In this workshop, we will open a Qard Hasan contract with the details as per slide.

T24 Basic Set up Tables for Islamic Banking -

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 Navigation to open a contract is shown here.

T24 Basic Set up Tables for Islamic Banking -

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 Customer, IS.Product, date, currency to be input.

T24 Basic Set up Tables for Islamic Banking -

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 Amount, principal profit, bonus to be 100%, payment schedule & settlement
instructions to be input.

T24 Basic Set up Tables for Islamic Banking -

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 Navigation to authorise the finance is shown.

T24 Basic Set up Tables for Islamic Banking -

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 Status of the contract upon authorisation shows current

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 Payment schedule & accounting entries are shown.

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 In this example, as per schedule : Payments for Feb, Mar & Apr 2016 are already paid.
Cooling date is 4th Jun 2016. We shall do a early payoff on 26th Apr 2016 which is
within cooling date.

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 When request Payoff is chosen, a payoff screen is populated to input the payoff date.
On committing this record, a simulation process starts for the same
(AA.SIMULATION.SERVICE to be started simultaneously).
The status of the service shows processing when service is running & the status
changes to Executed-Successfully if service has run without errors.
Upon successful completion, the payoff statement can be viewed which will give the
details of amount to be paid with bonus.
Hence the payoff to be done for the net amount.

Bonus calculated is the sum of profit amounts for Feb, Mar & Apr paid by customer,
which is reversed to customer as payoff is done within cooling period.
If in case customer is paying off after the cooling date, the profit is calculated as
normal & is collected from customer.

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 Next step is to process an FT/TT to settle the payoff amount.
Shown above is the accounting entry upon authorisation.

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 Once the FT payment has been processed & authorised, the arrangement status
changes to Pending Closure from Current & this arrangement will be automatically
closed during COB.

T24 Basic Set up Tables for Islamic Banking -

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In the learning unit, we learnt the Qard Hasan finance product, its workflow.