Have been following this topic for quite some time but have not posted before. This is my 1st post to LYN. I found out that there are many confusions regarding Islamic FDs/TDs. This has been going on for years it seems. I would like to share my understanding of Islamic deposits. 

There are actually two types of Islamic products similar to FDs.

There are 2 concepts related to Islamic term deposit: -
1) Mudarabah (Profit-Sharing) - usually offered as General Investment Account-i (GIA-i)
2) Tawaruq / Murabahah (Cost Plus Sale) - usually offered as Term Deposit-i (TD-i)

For GIA-i accounts, the profit rate is not fixed but based on profit sharing, the rate quoted is only indicative. For TD-i accounts, the profit rate is fixed upfront during placement and the profit is guaranteed. Initially when Islamic FDs were introduced, most of them were based on the Mudarabah concept. Later, the Tawaruq / Murabahah concept was introduced. Some banks converted their islamic TDs to the new concept while others introduced new product based on the new concept.

The confusion is further compounded when Public Bank introduced the Step-Up Promo (4+4+4) for its Islamic Term Deposit. This 'subject to OPR changes' condition is not unique to the TD-I only but also applies to its earlier Step-Up Promo(3+3+3) which is also applicable to its conventional FD. The profit rate for Public Bank's TD-i is fixed and guaranteed upon placement as it is based on Murabahah principle. Only the subsequent roll-overs are subject to OPR changes which is also equally applicable to conventional FDs.

With the coming into force of the IFSA, Murabahah-based products would be classified as Islamic deposits while Mudarabah-based products would be classified as Islamic investments. Hence, many banks are converting the accounts either to retain them as Islamic deposit or to convert them to Islamic investment. When the banks are finished with the conversion exercise, only Tawaruq / Murabahah-based products would be considered as Islamic term deposits. Mudarabah-based products would no longer be eligible for protection by PIDM as they are no longer Islamic deposit accounts.