Literally Al-Wadiah means amanat (like Bailment) where the Depositor (Bailor, who offers amanat) authorizes the Bank (Bailee, who takes amanat) to use the deposit given as amanat in Shariah compliant modes and the Bank (Bailee) is liable to return the same to the depositor (Bailor) on demand. Islamic Banking Current Account Deposits are managed on this Al-Wadiah principle. This is why in Islamic banking, Current Account is termed or named as Al-Wadiah Current Account. By opening such account, in general a depositor does not acquire any management (voting) right on the Bank or on the funds deposited. Apparently in banking operation Al-Wadiah Current Account seems to be similar to the conventional Current Account (of traditional Banks); but the difference lies in principle.
The operations of Al-Wadiah Current Account is primarily guided by the aforesaid principle of Al-Wadiah which in Islamic banking means the Bank (as Trustee unlike borrower in case of conventional current Account) would receive money from the client for safe custody with the condition to return the money on demand by the client either through cheques or by any other acceptable means, with prior permission from him/her (client/depositor) to the effect that the Bank can use money at its risk. At present no profit shall be allowed on Al Wadiah Current Account balances. The Bank at its own discretion uses the fund obtaining explicit consent from the depositors through acceptance of account opening rules to use their fund in amalgamation with Bank’s other funds at its own risk. Therefore the account holders bear no risk arising from use of their fund. The Bank would, however, enjoy the discretion to realize charges from the clients for safe keeping the money or for any other special services, if rendered.