Rastin Crowdfunding (RCF): A Financial
Subsystem of Rastin Banking
Bijan Bidabad
B.A., M.Sc.,
Ph.D., Post-Doc.
Professor
Economics and Chief Islamic Banking
Advisor
Bank Melli, Iran
E-mail:[email protected]
Abstract
Expansion and development of social
networks have provided new backgrounds for financial activities. Based on
Rastin Banking Regulations, crowdfunding can be installed to apply social
networks in the direction of Islamic finance. Two methods of crowdfunding are
introduced in Rastin Crowd Funding. Sponsor Crowd Funding (SCF) is for the
absorption of peoples� funds for special protective goals in the form of
non-profit and free payments to an entrepreneur through banks. Peer to Peer
Loan (PPL) is defined for absorption and collection of peoples� funds for
extending interest-free loans to a specific project of an
entrepreneur.Regarding the characteristics of crowdfunding and application of
social networks, the Crowd Funding System (CFS) is used as a web-based portal
for absorption and collection of money resources for crowdfunding project
through social networks in Rastin Banking.
Keywords:
Social
networks, Crowdfunding, Rastin Banking, Sponsor Crowd Funding, Peer-to-Peer
Loan, Rastin Crowd Funding System, Islamic Banking�
1. Introduction
Crowdfunding/sourcing is a kind of
financing based on collecting and participating people in profit and non-profit
activities in various fields.[1] In
a general classification, Crowdfunding can be considered as the participation
of all people, whether acquaintances or not, in relation to implementing a
task/project. An idea or a topic is shared in crowdfunding to collect and
accumulate resources to implement the idea or the introduced project. The
proposed project can be a charity and non-profit or a profitable activity.
In Rastin
Banking[2],
crowdfunding practically invites people to finance partially or totally a
defined project[3]
of an entrepreneur[4]
through a financial grant, or loan. Regarding the mentioned characteristics,
the method of work is mostly based on the cognition of the entrepreneur;
therefore, social networks, which have produced circles of people and friends,
can be used as an informative base for introducing the entrepreneur�s project.
Regarding this method of financing, various kinds of crowd financing can be
introduced in the form of grants (without repayment and as a gift), or, loans
(with repayment but without interest return).
Since financial
procedures require various technical, financial, economic and legal bases and
rules, therefore, without providing necessary rules and in the absence of
necessary background for these activities, there is no guarantee that the goals
of the project and intentions of the participants be achieved. Rastin Banking[5]
provides the necessary background for financial participation of people;
therefore, by using this infrastructure and based on standards, processes, and
working procedures of Rastin Banking, crowdfunding can also be installed and
executed. Rastin Banking has been designed in modular form, so it enables the
bank to expand Rastin Banking activities whit activating the corresponding
module. Many of instruments, subsystems and supplementary systems can be
applied according to the selected module, and crowd financing uses specific
parts of these systems.
Two kinds of crowd financing are defined here as Sponsor Crowd Funding (SCF) and Peer to Peer Loan (PPL) as financial subsystems in the framework of other Rastin Banking financial subsystems[6]. Crowd Funding System (CFS) is also designed to facilitate web-based marketing and money transfer in the two latter subsystems through social networks.
2. Sponsor Crowd
Funding (SCF)
Sponsor Crowdfunding is absorption and
collection of peoples� funds for a specified protective goal in which according
to the proposal[7]
of entrepreneur for a specified protective activity, bank after assessment of
entrepreneur�s proposal will collect needed fund from people and after
deducting its own commission without receiving any interest will pay it to
entrepreneur. No Rastin certificate[8] is
issued in SCF financing. In SCF, the sponsors[9]
can pay their protective fund to a person, group of people, or governmental and
non-governmental organizations. Entrepreneur or beneficiary can be a real
person or legal entity. The domicile of the entrepreneur and place of the
project can be inside or outside of the country. In any case, the guarantees
should be placed within the country and be enforceable and executable in the
country. In any case, the goal of the entrepreneur should be specified and be
in accordance with regular laws and regulations of the country. Goals of the
proposal can be protection and financing various projects among which are:
� Hygiene,
Medicare, and rehabilitation
� Education and
research
� Innovations and
inventions
� Ceremonies,
memorials, celebrations, and mourning
� Sport and
competition
� Unexpected
events and emergencies
� Electoral,
political, social, and cultural campaigns to protect specific person/s or
subject/s
� Establishment of
scientific, political, social, religious and cultural societies
� Environmental,
animals, and plants
� Travel and
accommodation
� Marriage, dowry,
marital gift (Mahriah) and family
� Gifts and
celebrity respects
� Repairs,
equipment, and parts
� Patronage
� Books, journals,
and multimedia
� Unitarian fates
and religions
� Art, music, and
film
� Release of
prisoner
� Job creation
� Establishment
and construction
Bank will
introduce the proposal of the entrepreneur to people interested in
participating in the entrepreneur�s project via web-based Crowd Funding System
(CFS) and social networks. Financing a project via the Base System[10]
or Financial Subsystems of Rastin PLS banking will not prevent financing a
portion of the project resources through SCF. However, in the latter case (twin
financing), the entrepreneur is obliged to include both methods in the project
proposal delivers to the bank at the same time. Application of twin methods for
venture capitals and risky investments, knowledge-based companies, innovations,
and inventions are necessary due to risky quality of these type of projects.
The total amount
of the project resource requirement could cover assessment, supervision, and
bank commission expenses. The project proposal includes a maximum amount of the
project�s required resources, starting and finishing date of the project. After
the deadline or fulfilling the necessary collected fund; the bank will close
the project in its website and will not accept deposit (sponsors) payments for
the project anymore.
Assessment of
project proposal in SCF will be in the direction of legitimacy and
truth-checking. The assessment unit[11]
will not assess the profitability of the project. The degree and method of
applying Rastin Banking regulations concerning financial transparency of
entrepreneur and information disclosure and corporate governance of
entrepreneur�s company and auditing will be determined according to assessor�s
conclusion considering avoiding unnecessary formalities and requirements.
The entrepreneur
will be bound to provide the bank with necessary guarantees for better
implementation of the project and true usage of the collected resources
according to the proposal. Cheques and drafts of entrepreneur or other persons
are accepted by the bank in this subsystem, as far as they can maintain the
confidence of the bank. The amount of guarantee will be equal to the amount of
the proposal plus a prevailing margin of the bank in determining guarantees�
amounts. After fulfillment of the project, guarantees will be released after
confirmation of trustee unit[12]
according to the proposal. In addition, all legal options rights of the sponsor
are negated and s/he cannot ask for refund her/his money back.
Trustee unit
supervision is limited to good performance and supervision on the way of
spending the collected fund from sponsors according to the project proposal.
The collected funds are safe-kept and are registered according to Rastin PLS
Accounting Regulations.[13]
Bank commission for SCF subsystem services is one percent of the total amount
of collected fund, which will be deducted from the provided collected fund. For
providing SCF services for assessment and supervision, the bank will also
charge the entrepreneur at most equal to one-third of the costs of assessment
and supervision in Rastin Banking Operational Bylaw for economic-beneficial
projects.
In case of
finding any corruption in the project proposal or delinquency in implementing
it, or in any case that implementation of the proposal is excused or stopped
for any kind of reason, the entrepreneur must pay back the received fund to the
bank and compensate the occurred losses. In the case of his refusal, without
going into legal processes, the bank is allowed to confiscate the principle and
losses from the entrepreneur�s guarantees and is obliged to pay the collected
money back to sponsors. If the bank cannot reach the sponsors for any reason,
it has to keep the money in its intermediary account for up to 10 years and
after that consider it as �unknown owner� asset.
SCF financing of
a project can be carried out by using other banking network channels at the
same time. The bank is obliged to publish the details of activities and
documents of the project proposal from the time of accepting it until a year
after the end of the project in its CFS website.
Bank will
provide necessary conditions for introducing SCF subsystem at its CFS website
and provide the link of its electronic payment port in social networks. Bank
will design its CFS website in such a way that the information regarding SCF
projects will automatically be updated in the bank�s user accounts and fan
pages in prevailing social networks. The amount of collected fund should be
online shown publicly at social fan pages of bank and entrepreneur.
Entrepreneur in the SCF project has to announce his user identification and
social fan pages codes and addresses to the bank so the bank could update
information in regarded pages.
3. Peer-to-Peer
Loan (PPL)
Peer-to-Peer Loan is defined as a
financial subsystem in Rastin Banking. It is absorption and collection of
individual funds for extending interest-free loans to the entrepreneur�s project
through the bank. No Rastin certificate is issued in PPL financing.
Bank after receiving project proposal of
entrepreneur and related documents concerning the details of the proposed
project will assess them and if needed, will obtain necessary inquiries about
the documents from authorized persons, and prepares a memorandum of
understanding (MOU) concerning the proposal with the entrepreneur. Depositors
will provide the bank with funds for financing the entrepreneur. After
absorption and collection of the necessary fund according to the proposal, the
collected fund will be extended to the entrepreneur in a lump sum, or at
predefined dates (as specified in the proposal) based on interest-free loan
contracts and after receiving or deducting bank�s commission fee and assessment
and supervision costs.
The entrepreneur
can be a real person or legal entity. Entrepreneur�s place of residence and
place of implementing project may be within or outside of the country. In the
latter case, the collaterals and guarantees should be located within the
country and should be enforceable and executable by internal laws.
Bank will
announce the project proposal through its CFS portal and social networks to
interested people for the collection of the fund. Financing the project through
other Rastin Banking Financial Subsystems does not conflict with financing
through PPL; but in this case (twin financing), the entrepreneur should mention
all applied financing methods in his project proposal.
The amount of
project finance can include assessment, supervision, and commission fees of the
bank. The project proposal has a specified ceiling amount, starting and
finishing and due dates, and after the specified termination date in the
project, or after collection of the specified fund, the bank will close the
project proposal in its CFS portal and fan pages of social networks, and after
then no more funds for the project is accepted.
The assessment
of the PPL project proposal will be in the direction of its legitimacy and
truth testing. The degree and method of applying Rastin Banking regulations
concerning financial transparency, information disclosure, corporate governance
and auditing about entrepreneur�s company will be considered and ruled
according to the needs while assessment will take place to avoid unnecessary
steps and complexities. The assessment unit will not assess the profitability
or cost-benefit analysis of the project.
The entrepreneur
is obliged to provide the bank with the necessary guarantees and collaterals
for the good performance of the project. The amount of these guarantees and
collaterals should be equal to the amount of the extended fund plus the
prevailing bank�s margin. Guarantees and collaterals will be released after
finalizing the project. The lender who has financed the project has no right to
withdraw his total or a part of the fund he has paid to the project before
maturity. The aggregated funds are safe-kept and are registered according to
Executive Bylaw of Rastin Banking Accounting standards.
Entrepreneur in
PPL financing is obliged to pay the received fund back to the bank according to
the due dates defined in the project proposal, and after deducting commission,
the bank will pay the remaining fund back to lenders. In the case of
un-fulfillment of the obligations of the entrepreneur, the bank will compensate
the losses of the lenders through guarantees and collaterals of the
entrepreneur. The commission of bank for providing PPL services is equal to one
and a half percent of the provided funds that will be deducted from the
extended fund. For providing PPL subsystem services of assessment and
supervision, the bank will also charge at most one-third of the costs of
assessment and supervision in Rastin Banking Operational Bylaw for
economic-beneficial projects.
Bank will
provide necessary conditions for introducing PPL subsystem in its CFS portal
and social networks� pages. Bank will design its CFS portal in such a way that
the included information regarding PPL projects will be automatically updated
in social networks� pages and accounts of bank and entrepreneur. The collected
funds should be shown online at social network fan pages of bank and
entrepreneur at any moment (online) to the public.
4. Crowd Funding
System (CFS)
Crowd Funding System (CFS) is a
web-based system for collection of funds for financing SCF and
� Content
Management System (CMS) and social networks connection capabilities.
� Dimensions of
webpages should be responsive and adjustable to different sizes of monitors and
smartphones.
� Should possess
Rich Site Summary (RSS) capabilities and consider its standards.
� The portal
information should be automatically sent to, and update fan pages in prevailing
social networks.
� In the showcase
of the projects, the portal should have shortcuts to social networks so that
the user could be able to share, recommend, like, or follow the posts.
� The graph of the
trend of promoters and patrons activities of the project should be displayed
during the project implementation period.
� URL of each
project should be automatically shared or tweeted in social networks during a
defined period (promoter capability).
� Tagging, status
updating, plugins, questioning, and application programs (App) characteristics
should be used in social networks in case of need.
� Customized
strategies and marketing advertisements should be used in social networks for
introducing the products.
� Necessary
strategies for creating fan pages and advertisements based on the bank�s brand
should be used in social networks� pages.
� The interactive
relationship between audience and success of messages, necessary tools for
monitoring the traffic and number of Link Clicks, Forwards or Retweets,
Comments (feedbacks), Sharing, Recommendations, Likes or Follows and other
concepts should be considered.
The bank
is bound to establish CFS website with the following capabilities:
Bank will
provide the appropriate Apps for smartphones with different operating systems
for easy access to CFS financing portal. Bank will provide necessary conditions
for connection to the electronic payment portal for CFS website and social
networks.
By installing
necessary security systems, the bank is bound to provide proper security for
clients' operations. Security definition should be based on multi-factor
authentication. Firewalls, account activity auditing, Virtual Private Network
(IPsec VPN, SSL VPN), Intrusion Prevention System (IPS), Webguard, Syslog,
Simple Network Management Protocol (SNMP), Computer Security Incident Response
Team (CSIRT), Penetration Test, Network Security and Operation Center,
standards and considerations of data security should be observed in bank�s data
network architecture.
The bank is
bound to consider more advanced security systems for large transactions.
Definition of �large transaction� is done by the bank�s management. By
receiving the client�s account number and security codes, the bank should
upload all other client's information at the webpage. By clicking the accept
button, the client confirms the information. At each stage of the transaction,
the client's identity and account numbers are the bases for verification. The
bank is obliged to define a unique identification number for each client. By
using unique international identification and account numbers, the bank is
obliged to design its system in such a way that the client can interact
internationally. The bank is bound to provide the possibility of managerial
reporting for different accessing levels with different query parameters in its
website.
The bank is
obliged to design its CFS system in such a way that in the cases of excuse (impossibility
of executing) and termination of the project that necessitates refunding the
money back to sponsor or lender, the possibility of restoring their account
numbers be provided.
The main
sections of CFS include information portal, registration and membership,
project profiles, number and amount of participation (sharing) in each project,
place (country) of the project, accessible social networks for the projects,
links of social networks to the projects, links to electronic payment portal of
bank, management reporting, staged registration software, entrepreneur�s
profile and uploading necessary documents and confirming them according to
user�s authorization.
� Information and
conditions of all projects are presented to the public at an information portal.
Project proposal and information about the entrepreneur (real or legal)
(balance sheet, profit, and loss statement and other financial reports for
legal entities) and other necessary documents should be published at
information portal.
� Manuals of using
the website, introduction to CFS, different sections, and method of membership
and entrance to the website should be explained at the information portal. This
section should be so defined to fulfill the main part of the questions of
clients about the CFS website.
� All clients
should fill an application form for using CFS services at the registration
page.
� By obtaining an
electronic banking account number, after registration client will have a unique
identification code. This user code will be used to identify him at the
website. After entering the CFS portal, the client will go to the registration
page and enters his identification code and electronic mail address. Name and
user code of the client will be emailed to him.
� For financial
participation, the client should enter his name and user code and after
approving the conditions of CFS and its commission fee, will be allowed to
enter to this section. At this page, the client can monitor conditions of all
projects� information and their latest amounts and number of participants. In
case of willingness to participate in a project, after entering to financial page
of the website, he will click the considered project and will put it in his
purchasing basket. Then he will go to pay for his sponsoring money.
� Bank can
announce all information about the latest conditions of the projects to all CFS
website members through social networks as well.
� The total amount
of the client�s purchasing basket should not exceed the amount of money he has
at his banking account. In case of deficit, he will receive a message to
eliminate some items from his purchasing basket.
� After confirmation
of the client�s offer, a copy of it will be left in his mailbox. All activities
on this confirmed offer will be sent to him by short messages and other
available distributive channels.
The entrepreneur
will announce his user code, and social network pages address to the bank so
that the bank can send them information updates systematically. The collected
amount for each project at any time interval according to ACH information
timing will be shown and updated at the CFS website, and social networks of the
bank will be updated and published publicly. The bank is bound to provide
backup-monitoring for all CFS activities to trace and follow up. After the
accomplishment of the project, all collected fund through the website will be
settled with the entrepreneur, and the project will be closed in the website
showcase and related social networks pages.�
References
بیژن
بیدآباد،
آذرنگ
امیراستوار،
سعید عبداللهی،
محمود
الهیاریفرد،
اسکندر پردل،
مریم حیدری،
علیرضا شفیعی،
محمدعلی
پوربهروز،
پیشنویس
لایحه قانونی
بانکداری
راستین، بانک
ملی ایران، 1391.
http://www.bidabad.com/doc/rastin-banking-bill.pdf
بیژن
بیدآباد،
آذرنگ
امیراستوار،
سعید عبداللهی،
محمود
الهیاریفرد،
اسکندر پردل،
مریم حیدری، علیرضا
شفیعی،
محمدعلی
پوربهروز،
پیشنویس آئیننامه
اجرایی
بانکداری
راستین، بانک
ملی ایران، 1391.
http://www.bidabad.com/doc/rastin-banking-regulation.pdf
بیژن
بیدآباد، طرح
تفصیلی تأمین
مالی جمعی
راستین (RCF). اداره کل
تحقیقات،
برنامهریزی
و مدیریت
ریسک، بانک
ملی ایران. 1393. http://www.bidabad.com/doc/detailed-rcf.pdf
Bidabad, Bijan, New Operational Islamic Banking System, Volume Three,
Legal Issues, Lap Lambert Academic
Publishing, OmniScriptum GmbH & Co. KG, 2015.
Bidabad,
Bijan. (2014). New Operational Islamic Banking System, Volume One, Theoretical
Foundations, LAP Lambert Academic
Publishing, OmniScriptum GmbH & Co. KG, ISBN: 978-3-659-54463-7.
Bidabad,
Bijan. (2014). New Operational Islamic Banking System, Volume Two,
Applicational Issues, LAP Lambert
Academic Publishing, OmniScriptum GmbH & Co. KG, ISBN:
978-3-659-55210-6.
Bidabad, Bijan
(2018), General Regulatory Framework in Rastin Profit and Loss Sharing Banking
(Part I-Operational Context). Journal of
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11-26, May. ISSN 2580-5568.
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http://www.bidabad.com/doc/rastin-regulatory-en-I.pdf
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(2018), General Regulatory Framework in Rastin Profit and Loss Sharing Banking
(Part II-Legal Groundwork). Journal of
Business and Finance in Emerging Markets, JBFEM, JBFEM, [S.l.], v. 1, n. 2,
p. 109-126, Nov. ISSN 2580-5568.
https://doi.org/10.32770/jbfem.vol1109-126�����
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(2019), General Regulatory Framework in Rastin Profit and Loss Sharing Banking
(Part III-Auxiliary Provisions). Journal
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Brabham, Daren C.
(2008), Crowdsourcing as a Model for Problem Solving: An Introduction and
Cases. Convergence: The International Journal of Research into New Media
Technologies 14:1, 75-90.
Brabham, D. C.
(2009). Crowdsourcing the public participation process for planning projects.
Planning Theory, 8(3), 242-262.
Zhao.Y, Zhu. Q.
(2012). Evaluation on crowdsourcing research: current status and future
direction. Springer science business media.
Copyrights
Copyright for this article is retained by the author(s), with
first publication rights granted to the journal.
This is an open-access article distributed under the terms and
conditions of the Creative Commons Attribution��
license (http://creativecommons.org/licenses/by/4.0/)
[1]
See:
� Brabham,
Daren C. (2008),
Crowdsourcing as a Model for Problem Solving: An Introduction and Cases.
Convergence: The International Journal of Research into New Media Technologies
14:1, 75-90.
�
Brabham, D. C. (2009). Crowdsourcing the public participation
process for planning projects. Planning Theory, 8(3), 242-262.
� Zhao.Y,
Zhu. Q. (2012).
Evaluation on crowdsourcing research: current status and future direction.
Springer science business media.
[2]
In Rastin PLS banking, bank is a unit, which allocates resources from
depositors to those who look for financing (entrepreneur) and according to
specific contracts; the obtained profit or loss is divided between depositor
and entrepreneur. By receiving commission (Jol), bank provides capital
management services for depositors, and invests their resources according to
their choices and in return, provides them by Rastin Certificate. Bank has to
use all his specialized potentialities to protect depositors' rights.
[3]
Project is a collection of economic activities with specified and concrete plan
with defined cost and terms for making profit through Rastin PLS banking
offered to PLS bank.
[4]
Entrepreneur is a real person or legal entity who proposes a project to PLS
bank for financing through PLS banking system and executes the project until
the end. In addition to have legal, financial, technical and performance
capabilities, the entrepreneur should have the other capabilities and
facilities/possibility to carry out the job.
[5]
Rastin PLS banking documents are accessible through: http://www.bidabad.com
[6]
Financial subsystems of Rastin PLS banking system refer to different defined
financing methods and services. These subsystems are governed by Rastin PLS
Base System's regulations.
[7]
Proposal is a written document covering a collection of necessary information
about the proposed project that describes analytical justification of the
project from economic, technical and financial points of view, with enclosed
necessary legal licenses and documents; which is submitted to Rastin PLS bank
by entrepreneur. After evaluation of the bank if be approved, proposal will be
a reference source against entrepreneur executive operations.��
[8]
Rastin Certificates are a collection of certificates designed and issued in the
base system and financial subsystems of Rastin PLS banking.
[9]
Sponsor is a real or legal person who pays an un-refundable money to protect a
project of entrepreneur of beneficiary via the bank.
[10]
Rastin Profit and Loss Sharing (PLS) Base System is an activity in Rastin
Banking based on participation of depositors in investment and economic
activities of entrepreneur based on real yield of projects in order to land
interest-free banking according to Islamic commandments and ethics.
[11]
Assessment unit is a unit in PLS department of Rastin PLS bank which assesses
the competence and capabilities of entrepreneur and his proposal.
[12]
The trustee unit is a unit at PLS department of Rastin PLS bank for supervision
and control of Rastin PLS proposed projects on behalf of bank regarding good
performance of project in comparison to initial proposal through key indicators
and financial reports and supervision for final delivery of the project.
[13] بیژن
بیدآباد،
آذرنگ
امیراستوار،
سعید عبداللهی،
محمود
الهیاریفرد،
اسکندر پردل،
مریم حیدری،
علیرضا
شفیعی، محمدعلی
پوربهروز،
پیشنویس آئیننامه
اجرایی
بانکداری
راستین، بانک
ملی ایران، 1391. http://www.bidabad.com/doc/rastin-banking-regulation.pdf
[14]
Single Euro Payment Area (SEPA)
[15]
The Society For Worldwide Interbank Financial Telecommunication (SWIFT)
[16]
Arab Payments and Securities Settlement Initiative (API)
[17]
Automated Clearing House
[18]
Automated Real-Time Gross Settlement (ARTGS)
[19]
International Bank Account Number (IBAN)
[20]
Real Time Gross settlement System (RTGS)
[21]
ScripLess Security Settlement System
(SSSS)
[22]
Non-Usury ScripLess Security Settlement System
(NSSSS)
[23]
Federal Deposit Insurance Corporation (FDIC)