What is a mudaraba deposit?
A mudaraba deposit is a way of keeping money at an Islamic bank without interest. You provide the money, the bank puts it to work in Shariah-compliant business, and you receive a share of the profit that business earns. So you are not a lender but something closer to a business partner.
That is why the profit is not guaranteed in advance; it depends on what the bank actually earns. Both savings accounts and term deposits can be opened this way.
Say Abdul Karim does not want to earn interest, but he also does not want his Tk 100,000 of savings sitting idle at home. He opens a one-year mudaraba term deposit at an Islamic bank. The bank puts the money to work; if it earns more that year his share is larger, and if it earns less, smaller.
How it works
Mudaraba is a partnership contract. The depositor owns the capital (sahib al-mal) and the bank manages it (mudarib). The bank invests the deposits in Shariah-compliant ways, such as sale-based (murabaha), lease-based (ijarah) or partnership financing. Part of that income is shared among depositors in a ratio agreed in advance.
Because interest is prohibited, the bank cannot promise a fixed profit in advance. At the start of the year or when you open the account, it announces a provisional rate, and profit is credited on that basis. After the year ends, the bank works out its actual income, announces a final rate, and adjusts for the difference.
Differences between accounts come from “weightage”: longer or larger deposits carry more weight in the investable pool, so they earn a higher rate. In principle, if there is a loss, the depositor as capital owner bears it, unless the bank was negligent or broke the contract.
Tk 100,000 in a one-year mudaraba term deposit at a provisional 9% is credited Tk 9,000 of profit. If the final rate for the year is 9.4%, another Tk 400 is added; if it is 8.6%, Tk 400 is adjusted back. Tax at source is then deducted. The rates are only examples.
Common variations
- Mudaraba savings account
- You can withdraw at any time; the weightage is low, so the profit rate is too.
- Mudaraba term deposit (MTDR)
- Kept for a fixed term from one month to several years; the Islamic form of an FDR.
- Monthly savings and monthly-profit schemes
- Mudaraba versions of a DPS or monthly-income scheme, also sold under names for Hajj, education, marriage or retirement.
- Islamic windows at conventional banks
- Many conventional banks offer mudaraba products through separate Islamic branches or windows, whose funds should be kept separate.
Who oversees Shariah compliance
Every Islamic bank has a Shariah supervisory committee that checks whether products and transactions comply with Shariah and approves how profit is distributed. In September 2025, Bangladesh Bank directed that from 2026 these committees must have 3–5 independent experts, their rulings on Shariah matters are final, and any disagreement with management must be reported to Bangladesh Bank.
Under the Bank Resolution Ordinance 2025, Bangladesh Bank has also approved a policy to set up its own Shariah advisory board. Remember that the Shariah committee checks whether the contract is sound; how financially strong the bank is remains a separate question.
Profit is not guaranteed: a real example
In 2025–26, several financially troubled Islamic banks were merged under the bank resolution law. In January 2026, Bangladesh Bank first said depositors of those banks would receive no profit for 2024 and 2025. After depositor protests, it reversed the decision within a week, setting profit for individual depositors at 4% a year for those two years and ordering any profit already paid above that to be adjusted.
The lesson: in mudaraba, the provisional rate is not a promise. If the bank’s income collapses, the final profit can be much lower.
How protected your money is
Deposits at Islamic banks are also covered by the Deposit Protection Act 2026: if a bank is closed, each depositor should get back up to Tk 2 lakh, counting all deposits at that bank. For Islamic institutions, the Act lets the fund’s trustee board set up a separate committee to oversee Shariah compliance. Anything above the limit is only as safe as the bank.
What return to expect
Mudaraba rates usually track conventional FDR rates, because both kinds of bank compete for the same depositors. With market rates low in 2020–2023, mudaraba term deposit rates were low too. In final rates declared for 2024, some banks paid roughly 8.5–9.6% on 3-month to 3-year term deposits and roughly 3–4.5% on mudaraba savings accounts.
At weak banks the final rate can be far below the provisional one; at several merged banks it was set at 4% a year for 2024–2025. So look at past years’ final rates, not only the announced rate.
Why people choose it
- A way to save in line with Shariah, without interest.
- Available in nearly every form: savings, term and monthly deposits.
- In a good year, the final rate can exceed the provisional one.
- Covered by deposit protection just like conventional deposits.
Points to weigh
- Profit is not fixed in advance; the final rate can be lower.
- Weightage and profit-sharing calculations are hard for ordinary customers to follow.
- Being Shariah-compliant does not make a bank financially safe.
- Closing early cuts the profit, just as with a conventional FDR.
Tax
Tax law treats mudaraba profit like interest. The bank deducts tax at source when it pays profit; under the Income Tax Act 2023, in recent years this has been 10% if you have a TIN and 15% if you do not; the annual Finance Act can change these rates.
For mudaraba monthly savings schemes, up to Tk 1.2 lakh a year paid in has qualified for the tax rebate in recent years. Once the balance crosses a threshold, excise duty is also deducted once a year; the threshold is set in the Finance Act.
Tax rules can change with each year’s Finance Act. Before a big decision, check the latest rules or speak to a tax adviser.
How to get started
- Choose an Islamic bank or the Islamic branch or window of a conventional bank, and look at its financial health too.
- The documents are the same as for an FDR: national ID, photographs, your nominee’s ID and photograph, and your TIN if you have one.
- Ask for the final rates of the past two or three years as well as the provisional rate.
- Get the term, auto-renewal and early-closure rules in writing.
- Keep the receipt or certificate somewhere safe.
Check before you start
- Do I understand the difference between the provisional and final rates?
- Were this bank’s final rates in past years close to its provisional rates?
- Am I looking at the bank’s financial health, not only its Shariah label?
- Might I need this money before the term ends?
- Does my total at this one bank exceed the deposit protection limit?
- Is a nominee properly recorded?