CHAPTER
12Operating an RF Bank in the
United States
A
bank—also known as a government chartered (licensed) depository in-
stitution—is allowed by government authorities to solicit and accept
deposits from the public and institutions for safekeeping and to manage
these deposits. Legally, the bank’s relationship with its customer is defined
by the type of account the customer chooses to open with the bank. As will
be discussed later, if the customer uses the bank as a place to keep money
safe and to withdraw from it using a checkbook or the Internet, the bank is
looked upon legally and according to Shari’aa and the Judeo-Christian-
Islamic values as a trustee of these funds. This type of account is called a
demand deposit account(DDA) in conventional riba-based banking. In RF
banking it can be called adeposit in trust account(DIT Account, orAmana,
which means trust). That means that the bank has accepted a legal responsi-
bility and promised the depositor before God and the laws of the land to
safeguard his or her funds, in order to make them available on demand. For
this service the bank can charge a fee.
On the other hand, the bank is also entrusted by U.S. bank regulations
and laws to manage a pool of funds for those customers who choose to in-
vest their money in an investment account, such as, for example, atime cer-
tificate of deposit(TCD). In this capacity, the contrast between the role of
the riba-based conventional banker and the RF banker becomes clearer. In
riba-based conventional banking, the objective is to maximize the spread
between the interest charged to customers who use the money to finance
their needs and the cost of these funds, which is mainly the interest paid on
the money deposited (invested) in the bank—mainly TCD. The riba-based
banker is trained to make that spread as high as possible within a well-
designed portfolio with a risk profile that is approved by the bank treasury,
the loan department, and the board of directors of the bank. The riba-based
banker who is involved in lending is trained to ‘‘sell’’ loans that will employ
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