A Contrast Between Wakalah Banking and Mosharekah Banking and a New Modus Operandi

One of the most important effective aims of Islamic banking is the mobilization of bank resources, especially long-term deposit accounts based on Islamic principles. In most banks, the mobilization of long-term deposit accounts is based on paying interest on these deposits. Because Riba (interest) is forbidden in Islam, the alternative model proposed by Islamic banking for this product are investment deposits. Islamic banks generally use two models to put these accounts into effect. One of them is a unique model called Wakalah model which function within the framework of interest-free banking operations in Islamic Republic of Iran. The other one is called Mosharekah a model which is common in most countries. Each of these models has its advantages and disadvantage. Criticizing and analyzing these two interest-free banking models of mobilizing investment resources, the present paper offers a new model in an attempt to overcome the shortcomings of these two models by making use of the advantages of Mosharekah model. The research findings show that this new model is more efficient than either Wakalah model and Mosharekah model because the advantages of Mosharekah model are included in it and are strengthened by transferable bonds and financial engineering.