BIMB AL-AWFAR: SAVING OR BETTING?

In 2010, Mr. Munshir Amani, a professor in fiqh muamalat, received a call from his
friend on a good December Monday morning. His friend sounded excited as Mr. Munshir
picked up the call. Munshir, theres a new financial service in town that offers you a
chance to win big money and its Islamic. And even better, if you arent lucky enough to
win, youd still get the return on money. Basically, its just a savings account but if you
are lucky, you can become rich. The more money you put into the account, the more
chance youll have in winning. I think I am going to transfer all my money into the new
account that I just opened. I might take out a loan and save it there too as Ill have a
better chance in winning.
As an Islamic scholar, it piqued Mr. Munshirs curiosity regarding the newly
mentioned product. A lot of questions ran through his mind after the phone call. Is it
really Islamic? Does is mislead people from the original intention of opening a saving
account? From where does the prize money come from; is it from the depositors money?
Without delay, he went to BIMBs website to see for himself the newly launched product
that sounded so attractive to the depositors.
Company Background
Incorporated under the Company Act 1965, Bank Islam Malaysia Berhad (BIMB) began
its business on the first of July 1983. With the initial paid up capital of about RM80
million, BIMB managed to pioneer the newly-born industry through its ups and downs.
As of 2010, BIMBs paid up capital has grown to RM1.73 billion and this has enabled a
continuous and sustainable growth of its assets and BIMB sees its future in further
business expansion.
Almost 30 years of operation, BIMB is now regarded as a well-established and
universally recognized brand in Islamic banking. Today, BIMBs network comprises of
100 branches and 730 self-service terminals nationwide. Through product innovation and
research, BIMB has a comprehensive list of more than 50 innovative and sophisticated
Islamic financial products and services that are at par to those offered by their
conventional counterparts.
One of the most important departments in the organization is the shariah committee
council, directly under the supervision of the head of shariah. BIMBs shariah advisory
council is led by its chairman, Ustaz Dr. Ahmad Shahbari Salamon. Together with the
other six members of the council, BIMB aims to continue in developing more Islamic
financial products that are innovative and competitive at the same time.
Islamic Banking
One interesting sight worth noting nowadays is the increasing awareness of the Muslims
regarding the status of a financial service/product; if it is shariah compliant or not. In the
pursuit of living the world according to the Islamic teachings, Muslims now are more
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concerned on the halal and haram issue in the financial aspect of their lives. And this is
one of the factors that drive the Islamic banking industry in Malaysia to flourish; in fact,
it drives the Islamic banking industry in the whole wide world to prosper.
Malaysia is a famous name in the Islamic banking arena, as it was among the first to
have launched and recognized Islamic banking. Not only that, Malaysia is fully
committed in the research and development of Islamic finance. The Malaysian
government acts as a benefactor in the industry growth by providing a conducive,
regulatory environment for the Islamic banks to be competitive.
Islamic banking started in Malaysia in 1983 with the founding of the first Islamic
bank Bank Islam under the Islamic banking Act, 1983. The reception from the public
back then wasnt as encouraging as the need for an Islamic finance institution wasnt
visible. Ten years after, in 1993, Islamic banking in Malaysia took a step further when
the Central Bank of Malaysia or Bank Negara Malaysia (BNM) introduced the Interest
Free Banking and Islamic Banking Window Scheme. Several Islamic innovative
products were introduced to accommodate the scheme but only few major banks
participated. The scheme allowed the conventional banks to offer Islamic banks over the
counter but it wasnt enough. Before the dawn of the new century, another full-fledged
Islamic bank came into existence named Bank Muamalat. In 2004, conventional banks
were allowed to establish Islamic bank subsidiaries to replace the existing Islamic
banking windows. Running interest-bearing and Islamic business under one roof would
lead to ambiguities as the profits generated from the two might be mixed, thus the
legitimacy of the profits could be questioned. Towards the end of the decade, more and
more Islamic banks were being introduced into the Malaysian market.
Table 1. Al-Awfar Saving Account
Features

Saving Account-i

Minimum Initial Deposit

RM100

Minimum Balance

RM100

Profit-Sharing Ratio

98 : 2 (Bank : Customer)*
*(Subject to change from time to time)

Who can open an account

Individuals
Associations
Schools/Universities
Clubs/Societies
Religious Groups

Eligibility to Enter Prize Draw

Every RM100 = 1 unit of entry

Frequency of Prize Draw

Monthly & Quarterly

Frequency of the prize draw and the date of the
prize-giving ceremony are subject to change at
the Banks discretion

Attracting depositors
Al-Awfar is an Arabic word that means prosperity. Recently launched by BIMB, AlAwfar is another saving and investment product that aims to attract more funds from the
general public. Almost similar to the general mudarabah, Al-Awfar also uses the basic
profit sharing method. But what renders the product different from other mudarabah
account is that it entails the depositors a chance to win exclusive cash prizes every
quarter or month.
Saving or Betting?
As mentioned before, Al-Awfar is launched in order to attract more funds from the
general public into the BIMBs deposit accounts. The mechanism is rather simple; in
order to be eligible for the draws, depositors are required to maintain a certain balance
(RM100) in their account during the deposit period. For each of RM100 deposited and
maintained, the depositors are entitled one unit of draw entry. In other words, the more
amount of money deposited into the account, the higher the chance of winning the draw.
Looking on the surface, it raises a few questions regarding the modus operandi of the
product. The chance and probability of winning the cash prizes can be seen to be closely
related to the element of gambling. This is due to the thoughts that the prizes are given to
the lucky winners at the expense of the other unlucky depositors. However, the
Shariah Supervisory Council of Bank Islam has approved this product in its 102nd
meeting dated 7th April 2008. According to BIMB, the product is free from any element
of gambling as the cash prizes would come from the banks own profit. This can be seen
on the banks website that states that the cash prizes provided by the bank are not
specifically derived from profits of Al-Awfar Savings and Investment Account-i.
One can argue that Al-Awfar product does not contradict fundamental rules for a
mudarabah contract. According to BIMB, prize draws are permitted if there is no element
of riba (usury), gharar (uncertainty) and maysir (gambling). They defend this with Surah
Ali Imran verse 44 that can be interpreted as;
This is a part of the news of the Ghaib (unseen, i.e. the news of the past
nations of which you have no knowledge) which We inspire you with (O
Muhammad ). You were not with them, when they cast lots with their pens as to
which of them should be charged with the care of Maryam (Mary); nor were
you with them when they disputed.
Given that both parties have agreed on a pre-determined ratio of profit sharing and
since BIMB claims that the concept of draw is totally acceptable in the Islamic context,
hence Al-Awfar is supposed to be sound in the shariah context. However, if one is to

analyze the impact of such way of promoting the product on the customers decision
making process, does it fully adhere to the Islamic marketing ethics?
Such way of promoting the product isnt necessarily deceiving, but rather it can be
misleading. The original purpose of saving in the savings or investment account is to
have the money placed at a secured place and at the same time to accumulate it over time.
However, the way the periodically prize draws are structured can misdirect the
customers intention. It might provide the same drive that other types of gambling give to
the gamblers some chance and probability to win big. Indeed, those depositors who
arent lucky enough to win the cash prizes will still get their agreed profit sharing ratio,
but if we were to look at the profit sharing ratio, is it enough to motivate the depositors to
deposit their money into the account? When comparing the profit sharing ratio of AlAwfar Savings Account and the other BIMB Saving Accounts such as the Mudharabah-i,
Ijraa-i, Wadi-i and Pewani-i, we can see a huge variance between Al-Awfars profit
sharing ratio against the other saving accounts.
Table 2. Al-Awfars Profit Sharing Ratio (PSR)
Deposit Product
Al-Awfar Savings Account*

PSR
Customer : Bank

Rate % p.a

2 : 98

0.06

Table 1. Profit Sharing Ratio (PSR) for Mudharabah-i, Ijraa-i, Wadi-i and Pewani-i
Tier

RM0.0000

- RM5,000.00

RM5,000.01

- RM10,000.00

RM10,000.01

- RM30,000.00

RM30,000.01

- RM50,000.00

RM50,000.01

- RM100,000.00

PSR
Customer : Bank

Rate % p.a

10 : 90

0.46

12 : 88

0.55

14 : 86

0.65

16 : 84

0.74

20 : 80

0.92

RM100,000.01

- RM200,000.00

RM200,000.01

- RM500,000.00

25 : 75

1.15

30 : 70

1.38

35 : 65

1.61

RM500,000.01 & above

As we can see, Al-Awfar offers 2:98 profit sharing ratios between the customer and the
bank, only 2% out of the profit or only 0.06% per annum returns. From the consumers
point of view, 0.06% a year is relatively low compared to the profit ratio that is offered in
other savings accounts. To say that a customer primarily wants to save in the Al-Awfar
account to earn just 0.06% per annum is rather illogical. Instead of saving as a mean to
safeguard against a future needs or emergency, customers set their eyes on the cash prize
and deposit their money to stand a chance to win big. Moral issues can also arise out of
this. Like how a gambler is able to mortgage everything that he has for gambling, the
same can happen to the depositors of Al-Awfar account.
The draws made monthly or quarterly also have to be done in a transparent manner.
According to BIMB, there is an external independent draw committee who will observe
the draw process in order for it to be transparent to the public. Although this is what they
are claiming, is the process really transparent? Ethical issues can arise out of the process.
Demographic of the winners should be published by BIMB in order to be transparent.
The winners should be random and cant be concentrated on certain groups only.
Also, the operation of the bank regarding the implementation of the product can also
raises an ethical issue. BIMB claimed that the drawing process that is done every month
or quarter year is supervised by an independent third party but to what extent is the
process being monitored. An unmonitored drawing process can certainly brings up
several issues that arent Islamically ethical. Islam advocates a fair distributive justice
and tampering the process in any way is clearly against the spirit of the shariah.
Conclusion
As Mr. Munshir browses through the BIMBs website, a lot of thoughts came through his
mind. He clearly thinks that this matter should be taken look at more closely and better
information is needed before he could pass on his judgment.

1. Key Learning Points

a. Understanding marketing ethics under the Islamic constraints.
b. Managing Islamic product structuring to be shariah compliant.
c. Analyzing the moral implications of an Islamic product.
2. Questions to Ponder
a. What can you do in place of Bank Islam Malaysia Berhad when you are trying to
structure your Al-Awfar product to be attractive?
b. Can the cash prize mislead the general public from the original intention of
saving?
c. Is Bank Islam Malaysia Berhad trying to compete against other Islamic banks?
d. If yes, is it a healthy competition?