Rastin Group Funding (RGF): 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
Rastin Group Funding (RGF) makes mobilization of limited
and determined depositor�s resources for a specific project possible and shares
depositors in the outcome of the projects with the intent of benefit and via
the bank according to Rastin Banking rules. In Rastin Group Funding, after
evaluation of the project proposal, and by observing the rules of the PLS Base
System or the applied Financial Subsystem defined in Rastin Banking and
considering the Rastin Banking Executive Bylaw; bank mobilizes the pre-specified
depositors� resources for a specific project; and after receiving necessary
collaterals and guarantees allocates them to entrepreneur and performs
supervision over the project execution. Bank receives capital management fee by
supplying capital management services to depositors.
Keywords: Rastin Group
Funding, RGF, Rastin Banking, Islamic Banking���
1. Introduction
Rastin Group Funding (RGF), in action, invites
(real/legal) persons to participate in a specific project[1] of the entrepreneur[2] to finance a part or all of the needed
money resources for execution of the project. Science financing processes needs
application of many different technical, financial, economic and legal issues;
therefore, without providing necessary conditions for these operations, and
without benefiting a sufficient infrastructure to perform these types of
operations, there would not be the success to reach the goals of the project
and intents of depositors[3]. Rastin Banking[4] provides a confident and sufficient
infrastructure for Musharakah and sponsoring activities. Thus, using this
structure, and also the standards, processes, workflow and operations, Rastin
Group Funding can be implemented.
Rastin Banking has a modular design, so
when the bank desires to develop the operations can activate the corresponding
part. Many of instruments, Financial Subsystems[5], and Complementary Systems[6] will be used correspondingly when the
full system of Rastin Banking is installed. Rastin Group Funding just uses some
particular parts of the Rastin Banking infrastructure and operations.
2. Rastin PLS Base System and its Financial
Subsystems
Rastin
PLS Base system[7] refers to the main process and general
regulations of Rastin Profit and Loss Sharing (PLS) Banking system. On request
and on behalf of the depositor[8], the bank[9] invests his fund in one of Rastin PLS
products and instead, gives Rastin Certificate of the selected project[10] to him and allocates his fund to the
selected project of the entrepreneur; and supervises the implementation and
execution of the project. In the end, after deducting its own commission, bank
divides the profit/loss (if any) among engaged sides (depositors and
entrepreneur). The bank is the agent of the depositor and is responsible for
observing his rights (depositor). He must use all his expertise to reach this
end. The bank's trustee unit[11] will
supervise the obligations carry out of entrepreneur on behalf of depositor and
bank receives a commission for his financial intermediation. In Rastin PLS Base system, Musharakah
(Participation) Certificates are used for finite projects[12], and Pazireh (Subscripted)
Certificates are used for infinite projects[13]. These two certificates belong to the
category of Rastin Certificates, and activities are done under Rastin Banking
regulations. The fixed profit rate is eliminated in Rastin PLS banking, and the
return rate is calculated according to the real return of capital in the real
economy. Most of the regulations of Rastin PLS Base system are extended to its
Financial Subsystems.
To make the bank capable of reaching his
goals in a proper way, this system has its own organization, structure, and
working process. Major topics in Rastin PLS Base system consist of organizational,
professional behavior of assessor[14] and trustee, project proposal[15], assessment, guarantees, collaterals
and entrepreneur cash contribution (brought), insurance, contract set-out,
supervision, entrepreneur[16], financial transparency, information
disclosure, governance, auditing, Rastin Participation Accounting, change of
project timing, settlement, bank receipts, transforming Pazireh (Subscripted)
Certificates into shares of entrepreneur company, inspection and commodity
standard, auxiliary financial tools, unexpected accidents (Force Majeure),
arbitration and more �
Rastin PLS Financial Subsystems refer to
specific financing methods or services in Rastin PLS Banking. These subsystems
work under general regulations of Rastin PLS Base system, and are:
1.
Joalah
Financial Sharing (JFS):[17] is a method in which, the bank finances
entrepreneur (producer) from depositor's resources or the provided sources by
the buyer; by selling Future Certificates (to depositor or buyer) and in the
framework of another joalah contract, entrepreneur produces the buyer
requested commodity. Future Certificate is used in JFS.
2.
Mudarabah
Financial Sharing (MFS):[18] is a kind of mudarabah
under Rastin PLS banking in which bank introduces the entrepreneur project
proposal in the field of trade or transaction of commodities (commerce) to
depositors and by selling them Mudarabah Certificates, finances the
entrepreneur (modarib). In MFS Mudarabah and Periodic Mudarabah
Certificates are used.
3.
Installment
Financial Sharing (IFS):[19]�
in IFS, installer (moghsit or depositor) will finance a portion
of the needed fund of an entrepreneur through the bank for a certain period of
time (amortization period). The entrepreneur will pay back his share by
installments and will own the total property of the project, and IFS ends. IFS
can be carried out through one of the contracts of Ordinary Mughasatah
(Installment), Rental Mughasatah (installment) and Musharakah
(sharing) Mughasatah (installment); and by application of three related
kinds of certificates of Ordinary Mughasatah and Rental Mughasatah
Certificates for finite projects and Musharakah Mughasatah
Certificate for infinite projects.
4.
Rent
Financial Sharing (RFS):[20] entrepreneur temporarily donates the ownership of a
part of his productive asset[21], rental asset[22] , or dead asset[23] to the depositor who finances him but keeps it as a
mortgage. Then pays back the fund received from the yields of the asset
proportional to depositor's share to depositor at the end of the contract, or
periodically. The original deposit of depositor will be given back to him after
the end of the project. The profit of the project will be given to depositor
periodically or in a lump. Mortgage Sharing, Periodic Mortgage Sharing,
Mortgage Mudarabah (commerce), Periodic Mortgage Mudarabah,
Mortgage Muzaraah (cultivating), Periodic Muzaraah, Mortgage Mugharasah
(planting), Periodic Mortgage Mugharasah, Mortgage Musaghah
(irrigation), Periodic Mortgage Musaghah, Mortgage Istisna (industrial/manufacturing),
Periodic Mortgage Istisna and Rental Certificates are used in RFS.
5.
Bail
Financial Sharing (BFS):[24] is the application of deposit of depositor by an
entrepreneur to produce a defined commodity and delivering the commodity or
paying back its value in a future specified time. BFS uses Bail Certificate.
6.
Rastin Group Funding (RGF): is
collecting deposits of specific depositors for a specific beneficial project
under the regulations of Rastin Banking. In RGF, Rastin certificate is not
issued.
7.
Rastin
Personal Security (RPS):[25] to create
competitive conditions and to increase the efficiency of social security
insurance and diminishing antitrust of social security systems and pension
funds, private and public pension funds are established according to Rastin
Banking regulations. People and firms can allocate a portion of their
obligatory (or optional) insurance premium payments (for himself or his
employees) for social security to the funds that operate under Rastin Personal
Security (RPS) and enjoy its benefits. Therefore, they will be exempted from
obligatory insurance premium payments equal to the payment they have paid to
these funds. RPS uses Social Security Certificate, Personal Security
Certificate, and Pension Security Certificates.��������
8.
Rastin
Social Takaful (RST)[26]: benevolent people can deposit their funds
at banks for charity purposes, and the bank will be allowed to pay profit (or
the principal as well) of deposit to needy people, in the form of a loan or
non-returnable payments (according to the depositor request). RST works under
Rastin Banking regulations as "public takaful" (humanistic duty of
people to resolve others' needs), or "ziman-e-I'alih"
(government duty to provide people's livelihood of the society). In addition,
the bank can collect Waqf (devoted) deposits to raise fund. Waqf
deposit is a kind of deposit devoted by the depositor (benefactor) to the bank,
and the bank will use the yields of this deposit to support needy people in the
framework of Rastin Banking regulations. Rastin Social Takaful is applicable
by issuing Takaful Certificate and Loan Certificate.
9.
Sponsor Crowdfunding (SCF): is the
process of collecting non-returnable funds for a specific protective goal of an
entrepreneur through the bank via social networks. In SCF, Rastin certificate
is not issued.
10.
Peer to Peer Loan (PPL): is the
process of collecting funds for loan-financing the entrepreneur through the
bank and via social networks. In PPL, Rastin certificate is not issued.
11. Rastin Swap Bond
(RSB): is based upon Mubadalah (swap) contract between Mobadil
(swapper) and Motebadil (swapee) in which the
durations and substances of swaps are equal for first and second swaps. Motebadil
(swapee) issues the bond and owes to Mobadil equal to the nominal value
of the bond, and should pay this amount (badal) to Mobadil
(swapper) at maturity. The issuer (Motebadil)
is obliged to give the mobaadal�
for the same amount and period as badal to mobadil. He can
choose a combination of amount and period that the multiplication of amount by
the period of mobaddal be equal to that of badal. At second
maturity, mobadil is committed to returning mobaddal to motebadil.
No interest rate is involved in these bonds, and they are of four kinds:
Central Bank Rastin Swap Bond, Treasury Rastin Swap Bond, Bank Rastin Swap
Bond, and Commercial Rastin Swap Bond. They can be in domestic money or foreign
exchange. Regarding the fact that these bonds are not based upon participation
and just indicate swapping of assets, is not covered by regulations of the
Rastin PLS Base system, but uses its infrastructure such as organization and
Rastin Certificate Market.
3. Rastin Group Funding (RGF)
In Rastin Group Funding, bank according
to the request of specified (limited and determined) depositors mobilizes their
resources to be allocated and participated in a specific project under the
regulations of Rastin Banking. The entrepreneur can be a real person or legal
entity subject to considering the rules of PLS Base System or applied Financial
Subsystem. Observing the related rules corresponding to the PLS Base System[27] and applied Financial Subsystem for the project is obligatory. Bank by
observing the rules of Rastin Banking Executive Bylaw[28] and after evaluation of the project
proposal[29] and without issuing Rastin Certificate[30] mobilizes the specified depositor�s resources for the evaluated project
and after receiving necessary guarantees and collaterals allocates them to the
entrepreneur and start supervision over the operation of the project.
Bank according to the pre-specified dates in project proposal reduces his
wage from the outcome of the project and regarding the type of the applied PLS
Base System or Financial Subsystem and the detailed cited services in the
contract and considering the rules of Rastin Banking Executive Bylaw returns
the whole or part of the capital (deposit) principle to the depositors. The
final settlement will be at the end of the participation period or periodically
or once in specific times according to the applied PLS Base System or Financial
Subsystem.��
In Rastin
Group Funding, the bank can insert necessary obligations when signing the
contract with depositors and entrepreneur. These obligations must not be in
conflict with Rastin Banking Executive Bylaw. Bank
revenue for evaluation and supervision according to Rastin Banking Executive
Bylaw and by considering the other rules and regulations can be increased by
half due to supplying better services. However, in all cases, the contents of
the rules of the applied PLS Base System or Financial Subsystem are obligatory.
Evaluation of the project proposal must be done by the assessment unit[31] of the bank either directly or with instrumentality via outsourcing the
task of evaluation of the project proposal to other confident assessment
corporations or in a special case to real assessors. But the bank can supply a
better-quality evaluation of the project proposal due to depositors request and
receiving a higher evaluation fee. Supervision over the project execution must
also be done by the trustee unit[32] of the bank either directly or with instrumentality through outsourcing
the task of supervision over the project execution to other confident supervision
corporations. But the bank can also supply better-quality supervision over the
project according to depositors request and receiving higher supervision fee.
In all cases, the responsibilities of assessment and supervision are loaded to
the bank.
Since in Rastin Group Funding, the relation between depositors and
entrepreneur is established via the bank and from the depositor�s resources and
depositors are aware of the economic and financial condition of entrepreneur,
in evaluation of entrepreneur bank dismiss some items of assessments that
should be fulfilled in other Financial Subsystems such as: not having returned
back cheque and tax settlement certificate relating to previous years
entrepreneur�s activities. Bank dismisses these items from its evaluation,
according to depositor�s written agreement. Moreover, public information
disclosure of entrepreneur as defined in Rastin Banking Executive Bylaw is
restricted to depositors.
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
گروهی راستین
(RGF).
اداره کل
تحقیقات،
برنامهریزی
و مدیریت
ریسک، بانک
ملی ایران. 1393. http://www.bidabad.com/doc/detailed-rgf.pdf
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.
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ISBN: 978-3-659-55210-6.
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51-65. ISSN 2580-5568.
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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]- 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.
[2]- 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.
[3]- Depositor is real person or legal entity
with a certain amount of fund (cash) asks PLS bank to participate in Rastin PLS
Banking products through direct contact with PLS bank, or via internet and buys
Rastin Certificate of one of the PLS banking products.
[4] Rastin PLS banking documents are accessible
through:�� http://www.bidabad.com
[5]- Financial Subsystems of Rastin Banking
System refer to different defined financing methods and services. These
subsystems are governed by Rastin PLS Base System's regulations.
[6]- Complementary Systems of Rastin Banking
refer to different defined compliment innovations, web-systems and other
methods and procedures that offer complementary services to facilitate
financial operations of the bank.
[7] Bidabad, Bijan, Rastin Profit and Loss Sharing (PLS) Base System. Journal
of Islamic Economics, Banking and Finance, 2014. http://www.bidabad.com/doc/pls-base-en.pdf� �
[8]
Depositor is a real or legal person who asks PLS bank to participate his
certain amount of fund (cash) in Rastin PLS banking products through direct
contact or internet and buys Rastin Certificate of one of the PLS banking
products.
[9]
In Rastin PLS banking, bank is a unit which allocates resources from depositors
to entrepreneur and according to specific contracts the obtained profit or loss
is divided between depositor, entrepreneur. By receiving commission (Joalah
fee), bank provides capital management services to depositor, and invest his
resources according to his choice and in return, delivers Rastin Certificate to
him. Bank has to protect depositors' rights by using all his specialized potentialities.�
[10]
Project is a collection of economic activities with specified and concrete plan
with defined cost and term for making profit through Rastin PLS banking offered
to PLS bank.
[11]
The trustee unit is a unit in Rastin PLS bank for supervision and control of
Rastin PLS proposed projects on behalf of bank and regarding good performance
of projects in comparison to initial proposal through key indicators and
financial reports till final delivery of project.
[12]
- Finitude projects are those projects that after completion of construction
and by starting utilization period are to be consumed from viewpoints of bank
and depositor. Finitude projects are not productive in depositor�s viewpoint
and do not make value added for depositor, although the depositor in
utilization period receives his installments for principal or rent of the
project.
[13]
- Infinitude projects are those projects that after completion of construction
period and starting utilization period are productive in viewpoints of
depositor and entrepreneur, and depositor shares in the yield of the
project.�
[14]
Assessment unit is a unit in PLS department of PLS bank which assesses the
competence and capabilities of entrepreneur and his proposal.
[15]
Proposal is a written document covering a collection of necessary information
about the proposed project of entrepreneur and 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 bank if be approved,
the proposal will be a reference document and can be used against entrepreneur
executive operations.�
[16]
Entrepreneur is a real 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/possibilities to
carry out the job.
[17] Bidabad, Bijan, Joalah Finance Sharing (JFS). Journal of Islamic
Economics, Banking and Finance, 2014.
[18] Bidabad, Bijan, Mudarabah Financial
Sharing (MFS). Journal of Islamic Economics, Banking and Finance, 2014.
[19] Bidabad, Bijan, Installment Financial Sharing (IFS). Journal of Islamic
Economics, Banking and Finance, 2014.
[20] Bidabad, Bijan, Rent Financial Sharing (RFS). Journal of Islamic
Economics, Banking and Finance, 2014.
[21]
"Productive assets" refers to the assets of an operating firm.
[22]
"Rental assets" refers to those assets, which can be let.
[23]
"Dead assets" refers to non-operating (suspended) firms or
uncultivated lands assets.
[24] Bidabad, Bijan, Bail Financial Sharing (BFS). Journal of Islamic
Economics, Banking and Finance, 2014. http://www.bidabad.com/doc/bfs-paper-en.pdf
[25] Bidabad, Bijan, Rastin Personal Security (RPS). Journal of Islamic
Economics, Banking and Finance, 2014.
[26] Bidabad, Bijan, Rastin Social Takaful (RST). Journal of Islamic Economics,
Banking and Finance, 2014.
[27]- Rastin Profit and Loss Sharing (PLS) 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.
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 PLS
banking Certificate. Bank has to use all his specialized potentialities to
protect depositors' rights.�
[28] -
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
[29]- Project 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.�
[30]- Rastin Certificates are a collection of
certificates designed and issued in the base system and financial subsystems of
Rastin PLS banking. Supervisory feature of the trustee unit of the PLS bank on
these certificates, distinguishes them from other financial papers and have
prefix of "certificate". Being nameless, negotiable in secondary
virtual Rastin Certificates Market, having market price based on supply and
demand of certificates, settlement by the last certificate holder are some
characteristics of Rastin Certificates. Settlement of these certificates are
carried out under the supervision of the trustee unit of PLS bank.��
[31]- Assessment unit is a unit in PLS department
of Rastin PLS bank which assesses the competence and capabilities of
entrepreneur and his proposal.
[32]- 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.