Is Zakat payable on Fixed Term Deposit accounts in Islamic Banks managed under Wakalah?
The answer
After discussing with the Shariah scholars at Islamic banks, we understand that in many Fixed Term Deposit Accounts, monies taken from the liability’s side of Islamic banks are generally invested in commodities, Sukuk as well as Home Purchase Plans in the asset’s side of the bank. These investments are for resell and capital gain purposes. A Wakalah fee is charged for the service provided in managing the funds of the depositors and the depositors are given profit in return.
In short: Zakat is due on the whole holding.
Explanation
The entire holding in such an account is subject to Zakat as the funds are used to buy commodities to resell for capital gain. If the funds are utilised in non-Zakatable assets, the answer will be different.
And Allah knows best.
Mufti Faraz Adam
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.