Islamic banking investment products

Terms and conditions

1.    Choice of product

1.1    You must choose the Account you wish to invest in and after the Account has been opened, we will provide you with the details of the Account.

1.2    We will not provide any income tax or any other advice pertaining to your choice of product, and you should seek independent tax advice from a suitably qualified consultant.

1.3    The Account cannot be converted or transferred from one type to another, unless it is permitted in terms of specific product rules.

2.    Use of the account

You agree that:

2.1    we will open the Account for you;

2.2    you will supply us with the details of the signing arrangements (and any changes thereto) on the Account;

2.3    you will conduct the Account in a manner acceptable to us;

2.4    we reserve the right to monitor the use of the Account for assessing compliance with Product specifications;

2.5    you can only transfer funds electronically from your Nedbank transactional account into the Account;

2.6    the account is not enabled to accept cash or foreign transactions;

2.7    when your investments mature, we will pay the funds into your nominated Nedbank transactional account, and you can decide to invest the funds into another account with us;

2.8    If you no longer qualify for the Account, we reserve the right to close the Account and transfer the funds to your nominated Nedbank transactional account, and we will notify you if we do this;

2.9    you may not cede, assign, or otherwise encumber any of your rights or obligations in and to the Account (including the funds held in the Account) without our prior written consent, which consent may be subject to any terms and conditions stipulated by us at our sole discretion.

3.    How the account works

3.1    Your Account will operate according to the unrestricted Mudarabah transactions structure, which means that you will participate in a Profit share in the following manner:

3.1.1    You must have a Nedbank transactional account for the duration of your Account.

3.1.2    To invest and qualify to start earning any profit share, you must transfer the minimum Capital funds electronically from your Nedbank transactional account into your Account and we will invest it on your behalf. The product specification will set out the minimum investment deposit required for each Account.

3.1.3    We provide the management and expertise and trade the Capital funds by investing in Shari’ah Compliant Assets at our discretion.

3.1.4    The Shari’ah Supervisory Board monitors and audits accounts and processes on a periodic bases to ensure that it is conducted in accordance with Shari’ah.

3.1.5    The Capital funds are used for buying and selling Shari’ah Compliant Assets from which profit may be generated.

3.2    We can change the required balances, minimum deposits, fees, and/or Takharuj fee that apply to your Account from time to time. We will notify you if we do this.

3.3    If we have received any income on your Account in conflict with Shari’ah, as confirmed by the Shari’ah Supervisory Board, you authorise us to dispose of any involuntary non-permissible income credited to your Account. You agree that we can donate that income to any charitable organisation(s) of our choice without your further permission. We will notify you in the event that this occurs.

3.4    This Account is not covered under CODI. 

4.    Profit share

4.1    You and Nedbank will share in the profit.

4.2    We will share this profit with you according to the Profit share split: 50% to Nedbank and 50% to you.

4.3    Your Profit share is allocated to you based on a weighting system, considering the value of the Capital funds and its duration. Profit weightings have been defined as follows:

4.4    The indicative profit rate provided by us on the day the Account is taken up by you is based on the profit weightings noted above.

4.5    The indicative profit rate percentage quoted to you is market-related and only valid on the day on which you receive the quotation.

4.6    If you accept the indicative profit rate percentage quotation and invest prior to the cut-off time, the indicative percentage quoted is the indicative profit rate that you may receive for your Account.

4.7    Your Profit share may start accumulating from the day the Capital funds is transferred into your Account, and if you transfer the Capital funds into your Account before the daily cut-off time.

4.8    If you miss the cut-off time, your Profit share will start accumulating from the following day and a new indicative profit rate percentage quotation may be applicable and will be communicated to you.

4.9    If you provide us with an investment instruction during a weekend or on a public holiday, it will be processed on the next working day and a new indicative profit rate will be quoted for you on that day.

4.10  Your Profit share is payable to you monthly in arrears. You may choose to have your Profit share capitalised into your Islamic Banking Investment Account or paid monthly to your nominated Nedbank transactional account.

4.11  Profit shares are paid monthly, except for fixed investments of less than 1 month, where the Profit share is paid on maturity.,

4.12  If the Profit share is paid out to you monthly, the investment will yield Profit share at a nominal rate. If the Profit share is capitalised, the investment will yield Profit share at an effective rate. The effective rate will be higher than the nominal rate due to the compounding effect of capitalised Profit share. 

4.13  The Profit rate on a fixed deposit will be linked directly to the profit share instruction selected for the amount invested at the time.

4.14  If the Profit share payment date is a Sunday or public holiday, depending on the Product Specifications the Profit share will be paid out on the preceding or following business day.

5.    Sharing in losses

5.1    If no Shari’ah-compliant assets are available for trade, we will notify you, and your funds will be returned to you.

5.2    When there are no Shari’ah-compliant assets available, no Profit share will be generated for that period.

5.3    You cannot earn any Profit share on your Account if there was no profit made on the Capital funds during the investment term.

5.4    You may carry any losses if the Mudarabah suffers a loss. Losses will, however, always be limited to the amount of the Capital funds you deposited with us.

5.5    We do not guarantee that you will receive a Profit share in the Mudarabah. We do not guarantee that you will recover the Capital funds you invested when our relationship with you ends.

6.    Additional deposits

6.1    You can make additional deposits into your Account only if you have a notice deposit investment account with us.

6.2    You cannot make additional deposits into your Account if it is a fixed deposit investment account.

6.3    The Profit share will start accumulating on your Account from the day that the additional deposit is cleared and provided that the additional deposit is made and cleared before cut-off time. If you have missed the cut-off time, Profit share will start accumulating from the following day.

6.4    You can make additional deposits only by transferring funds electronically from your Nedbank transactional account into your Account.

7.    Freezing, suspension, modification, restriction and termination

7.1    We may freeze, suspend, modify, or restrict your Account or terminate this Agreement at any time with immediate effect and without prior notice, due to the following circumstances, but not limited to them:

7.1.1    When we are compelled to do so by law.

7.1.2    When we have reasonable suspicion that the Account is used for illegal, unlawful, or fraudulent purposes.

7.1.3    Your conduct results in a breach of our regulatory obligations. 

7.2    We will give you reasonable notice if we want to freeze, suspend, modify, or restrict your Account or terminate this Agreement due to the following circumstances, but not limited to them, as determined in our sole discretion:

7.2.1    When we are compelled to do so by law.

7.2.2    When there are reputational risks or for operational or business reasons.

7.2.3    When you no longer qualify for the Account according to our Product specifications.

7.2.4    When you are in breach of the Agreement.

7.2.5    When you are in breach of any other agreement with us.

7.3    We must comply with local and international laws, regulations, policies, and requirements relating to anti-money-laundering, counter-terrorist financing, and sanctions. We may therefore continuously screen, verify, process, and monitor all your and any related information, instructions and transactions effected by you and/or on your behalf. This may also result in your transactions, or the use of your Account, being prohibited, delayed, withheld, limited, declined, or conditionally approved, and/or your funds being confiscated and/or our relationship with you being terminated.

8.    Product withdrawal or discontinuation

8.1    If it becomes uneconomical or commercially impractical for us to provide the product or service offered in terms of this Agreement or if we are unable to continue to provide the product or service, for whatever reason, we may terminate that product or service on reasonable notice to you.

8.2    Should we terminate your Account, we will transfer the Capital funds and Profit share to your nominated Nedbank transactional account. We will notify you if we do this.

9.    Privacy consent

9.1    Subject to applicable laws, regulations, and our privacy policy, you give us permission to process your personal information as we see fit for both your and our legitimate interests. This includes your race, biometrics, and alleged criminal behaviour (if necessary).

9.2    You consent to our accessing your credit bureau data, obtaining your bank statements from your bank, sharing your information with third parties, sharing information about your application with third parties, collecting your personal information from third parties, sharing information about your application with the Southern African Fraud Prevention Service and processing your personal information outside of South Africa.

9.3    Processing includes doing affordability assessments, credit scorings and profile building that may help us offer you a product or service that will suit your needs. You may ask for a description of your personal information that we have on record and for the details of third parties who have, or have had, access to your personal information.

9.4    You may withdraw your consent by notifying us in writing. You may also ask that we correct or delete your information, object to our having had your information, and complain to the Information Regulator.

10.    Income tax certificates

10.1  After February each year, we generate an IT3(b) certificate only if the amount of Profit share earned on the Account is equal to or more than the minimum amount prescribed by SARS from time to time.

10.2  These certificates are made available to you on request once they have been generated.

10.3  These certificates indicate the amount of Profit share accrued and Profit share paid in the applicable tax year, irrespective of whether the Profit is paid out in the same tax year.

10.4  These certificates are sent to SARS regardless of whether the Profit share paid or earned is equal to or more than the minimum amount of Profit share prescribed by SARS from time to time.

11.    Statements

11.1  We will, at our discretion, make regular statements relating to your Account available to you.

11.2  You elect to receive electronic statements.

11.3  It is your responsibility to check your Account statements regularly and report any discrepancies to us within 30 days of the date of your detection of the discrepancy.

11.4  If there is a dispute in respect of the items appearing on a statement, our records serve as prima facie (on the face of it) proof.

12.    Digital interaction

12.1  You accept all risks of Digital interaction with us. These risks include the following:

12.1.1  It may not be the safest way to give us instructions, as Digital interaction may be tampered with before, during or after transmission and can be manipulated fraudulently.

12.1.2  Receipt or execution of Digital interaction may be delayed because Systems and Devices failed, malfunctioned or were unavailable.

12.1.3  Digital interaction may be illegible or inaudible, which may lead to instructions not being executed as intended.

12.1.4  We cannot verify telephone numbers, email addresses, fax numbers and signatures.

12.1.5  We cannot establish the identity or designation of the sender of the Digital interaction.

12.1.6  We may not be able to confirm receipt of Digital interaction instructions.

13.    Early release

13.1  Other than in exceptional cases prescribed by law, we are obliged by law to charge a substantial fee for the early release of a notice and/or fixed investment.

13.2  The early release fee will be in line and based on the principle of Takharuj.

13.3  You must provide us with reasons to support a request for the early release of your Account.

13.4  The Takharuj fee will be based on the Nedbank Call Rate Equivalent. We will provide you with a breakdown of this calculation on your request for early release of your Account.

13.5  The percentage used to calculate the Takharuj is available to you through the Nedbank Islamic Investment Desk.

13.6  The early release fee will be debited from the withdrawal amount before it is paid to you.

14.    Legal notices

14.1  For all purposes under this Agreement the Parties choose the following addresses as their respective domicilia citandi et executandi:

14.1.1  Us: Group Legal Counsel, Group Legal, Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown, Sandton.

14.1.2  You: the last known physical address supplied by you.

14.2  Any legal process to be served on any Party may be served on that Party at the address specified in this clause.

14.3  A legal notice will be valid and effective only if it is given in writing and delivered by hand or prepaid registered post.

14.4  If delivered by hand, the notice will be deemed to have been received on the day of delivery, provided it was delivered to a responsible person during ordinary business hours.

14.5  If delivered by prepaid registered post, the notice will be deemed to have been received within seven days of the posting date, unless the contrary is proved.

14.6  Notwithstanding anything to the contrary in this clause, a written notice or other communication actually received by any Party will be deemed to be adequate notice or communication to the Party, even if the notice or communication was not sent to or delivered at the Party’s chosen address.

14.7  Any Party may, by written notice to the other Party, change the address for the purpose of this clause to any other address (other than a post box number), provided that the change will become effective on the seventh business day after receipt of the notice.

14.8  It is your responsibility to ensure that we are kept informed of any changes to your personal information, including address and contact details.

15.    Liability

15.1  Except where damage or loss arises directly or indirectly from our wilful misconduct or gross negligence (or that of any person acting for or controlled by us), we will not be liable to you for any damage or loss that you may suffer because of:

15.1.1  any action taken in terms of clause 7 or 8;

15.1.2  your use of digital means to communicate with us;

15.1.3  any person having gained unauthorised access to any information or data; and/or

15.1.4  incorrect information having been given to us or to any person, including any credit bureau.

16.    Statement of account

Your Account statement will be provided to you only on your request. You elect to receive electronic statement of accounts.  It sets out the investment details and Profit share. We send it to you in the form of a liquid document, such as a certificate or other written evidence. The document is binding, prima facie proof of the content, and is valid in any competent court or for any other purpose.

17.    Certificate of balance

Your certificate of balance will be provided to you on request. It sets out the investment details and Profit share. We send it to you in the form of a liquid document such as a certificate or other written evidence. The document is binding, prima facie proof of the content, and is valid in any competent court or for any other purpose.

18.    Jurisdiction

At our option, any claim arising under this Agreement may be recovered in any magistrates’ court having jurisdiction, notwithstanding the amount of the claim, and you hereby consent to the jurisdiction of that court.

19.    General terms

19.1  Before opening the Account, we are entitled to satisfy ourselves of your suitability as an accountholder.

19.2  We are entitled to refuse to open the Account or accept a deposit.

19.3  You agree that we may combine any or all accounts you may have with us, without notifying you of that, and we may set off any amount that you owe us from whatever cause against any money you have in any accounts with us. However, if we combine only some accounts, we will still have the right to claim from you any amount in respect of an account that is not part of the combined accounts.

19.4  The Agreement constitutes the whole Agreement between you and us in connection with the Account.

19.5  We may amend the Agreement and we will give you notice of any such amendments.

19.6  Any latitude, indulgence or extension of time granted by us to you will not constitute a novation or waiver of our rights in terms of the Agreement. The failure by any Party to enforce any provision of this Agreement will not in any way affect that Party’s right to require performance of the provision at any time in the future.

19.7  Any amendment of the Agreement will not constitute a novation of this Agreement or of any of your previous obligations to us.

19.8  Should any provision of this Agreement be found by any competent court to be defective or unenforceable, the remaining provisions of this Agreement will continue to be of full force.

19.9  The Agreement will be governed in accordance with the laws of South Africa.

20.    Alternative dispute resolution

20.1  We have a complaint process, the details of which that are available through the Islamic Investment Desk, contactable at IslamicBanking@Nedbank.co.za

20.2  If you have a dispute or a complaint regarding your Account, you must send us a written statement setting out the dispute or the complaint. We undertake to investigate your dispute or complaint within a reasonable time, keep you informed during the investigation, and provide you with a final written response.

20.3  If you are not satisfied with the outcome of your dispute or complaint, we may refer it to the Shari’ah Supervisory Board for investigation.

20.4  Should you still not be satisfied with the outcome of your dispute or complaint, you can contact the National Financial Ombudsman and/or the Financial Sector Conduct Authority and/or the National Consumer Tribunal using the details below:

21.    Acknowledgement

21.1  You warrant that you have fully and truthfully answered all questions and responded to requests for information by us relating to this Agreement.

21.2  You confirm that you understand and appreciate the risks and costs inherent in this Agreement, as well as your rights and obligations under this Agreement.

22.    Interpretation and definitions

22.1  In this Agreement:

22.1.1  clause headings are for convenience only;

22.1.2  unless the context indicates a contrary intention:

22.1.2.1  the singular includes the plural and vice versa;

22.1.2.2  any gender includes the other genders;

22.1.2.3  a natural person includes a juristic person and vice versa; and

22.1.2.4  any number of days will be calculated by excluding the first and including the last day, or, where the last day falls on a day that is not a business day, the next business day; and

22.1.3  unless the context requires otherwise, the following words and expressions have the meanings set out hereunder: