




































Copyright © CC-BY-NC 2019, CRIBFB | IJFB 

 Indian Journal of Finance and Banking; Vol. 3, No. 1; 2019 

  ISSN 2574-6081   E-ISSN 2574-609X 

Research Article               Published by Centre for Research on Islamic Banking & Finance and Business, USA 

 

     40 
 

Insurance Products in Rastin Profit and Loss Sharing Banking 

 

Bijan Bidabad1 

Abstract 

Purpose: This paper aims to explain new insurance products and policies in Rastin Profit and Loss Sharing (PLS) 

Banking. Rastin Banking is a full Islamic Banking System with all necessary parts for banking operations that can 

be installed in conventional and Islamic banks both. In this paper, we are going to explain the milestones of new 

insurance products and policies.  

Design: Rastin Banking complies with the nature of the intermediary financial activity and has a new type of 

banking operations. The systems and instruments of this type of banking have different risk treatments, and new 

insurance policy and measures should be defined to cover the risks of the operations In order to fulfill this goal, 
appropriate insurance policies are described.  

Findings: Some new insurance products are defined such as Certificate Insurance, Insurance of Market Value of 

Certificate, Responsibility/Engineering Insurance, Insurance of Accidents Concerning the Article of Sharing, 

Collateral Insurance, Loss Margin Insurance, Profit Margin Insurance, Merchandise Transportation Insurance, 

Production Equipment and Installations Insurance, Product Quality Insurance, Insurance of Commodity under 

Production, Inventory Insurance, Production Limited Loss Insurance, Transaction Limited Loss Insurance to handle 

Rastin Banking. 

Research limitations: Many of these insurance policies are new and require more elaborations for further practical 

development and adjustment. 

Practical implications: These insurance products can be used both in Rastin Banking operations as well as 

conventional business and finance arrangements. These insurance policies have no conflict with indisputable legal 

principles, and insurance companies can supply these insurance products based on their own actuary calculations. 
Social implications: The introduced insurance policies actually change profit and loss sharing activity to just profit 

sharing.  

Originality/value: Approach of this system and the designed insurance policies is entirely different and new.  

 

Article Type: Technical paper 

 

Keywords: Rastin Banking, Profit and Loss Sharing (PLS), Insurance, Insurance Products, Insurance policy, 

Islamic banking 

Introduction 

Insurance in Persian is called “Bimah” derived from the word “Bima”, and has Sanskrit root2 and also has the same 

root of the verb “Bim” (to fear) in Persian. Some others believe that this term comes from the translation of a 
Russian word of “Astrakhan” from a philological point of view that means as opposite of fear; this is because 

Russians introduced insurance in Iran for the first time. Some others believe “Bimah” is the name of a town in 

Tabaristan and Deilam.3  

Daily applied the meaning of Bimah is the organized grouped guarantee or coverage for facing the aftermaths of 

perils and losses or future unwelcoming events in socioeconomic life. Insurance is defined as a contract according to 

which the insurer underwrites to indemnify another (insured person) in the event of loss or damage. An insurer is a 

person or company offering insurance policies in return for premiums. An insured person is a person whose interests 

are protected by an insurance policy. On the other hand, he is an individual who contracts for an insurance policy 

that indemnifies him against loss of property or life or health, etc. (insured article).4 In other words, the insurer and 

                                                             
1 (B.A., M.Sc., Ph.D., Post-Doc.) Professor of Economics and Chief Islamic Banking Advisior, Bank Melli Iran. 

bijan@bidabad.com http://www.bidabad.com 
2 Moin, Mohammad (1971) Moin Persian Dictionary. AmirKabir Publishing Institute. In Persian. 
3 Salehi, Jan Ali Mahmoud, (2002). Insurance law. Bimeh Markazi, Iran. Training and Publication Department. In Persian.   
4 http://www.thefreedictionary.com/insurance 

mailto:bijan@bidabad.com
mailto:bijan@bidabad.com
http://www.bidabad.com/
http://www.thefreedictionary.com/insurance


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www.cribfb.com/journal/index.php/ijfb                           Indian Journal of Finance and Banking                                            Vol. 3, No. 1; 2019 

 

41 
  

the insured person will transact and share the costs of a particular risk of the item insured.5 

Insurance Products 

Economic/business insurances have a long previous record of about 6500 years. According to discovered Papyrus, 

stonecutters of ancient Egypt had established a joint fund to protect themselves in the case of an accident. 

Hammurabi, the king of Babylon, enacted a law in which those in charge of transportation were responsible for the 

safeguarding of merchandises in 2250 BC. Also, in Greece, there were associations, which helped their members 
who paid fees to an established fund if they had suffered any loss in 588-640 BC. Similar activity has also been seen 

in ancient Rome.6 Many similar activities have also been observed in medieval times.7 Business insurances today are 

as more or less in the following context: 

1. Life insurance 

2. Personal accident insurance 

3. Medical and Medicare insurance 

4. Fire insurance and subordinate dangers such as explosion, theft, earthquake, flood, air crash and even terrorist 

attack 

5. Transportation insurance 

6. Civil responsibility of transportation means (marine, air and land transports)  

7. General responsibility (legal and professional) insurance 

8. Full risk coverage insurance of contractual works, installing and related civil responsibly  
9. Money in the fund and in action insurance 

10. Staff’s honesty and trust insurance 

11. Oil exploration and extraction and related industries insurances 

12. Agricultural products insurance 

13. Export insurances      

In all the above-mentioned insurances, by receiving insurance fee, the insurer will provide financial risk coverage 

for the insured person about the article insured. 

Risk Nature in Rastin Banking Operations and Instruments  

Rastin Profit and Loss Sharing is an activity in Rastin Banking8 and is based on the participation of depositors9 in 

economic activity and investment of entrepreneur10 based on the real yield of projects in order to land real interest-

free banking according to Islamic commandments and ethics. In Rastin Profit and Loss Sharing (PLS) Banking, the 
bank is a unit, which after assessment11 of the project proposal12; allocates resources from depositors to the project13 

                                                             
5 See: Mehr, Robert I., (1985) Principles of Insurance. Richard D Irwin; 8th edition. 
Vaughn, Emmett J.(1989) Fundamentals of Risk and Insurance.5th edition, Wiley. 
6 Salehi, JanAli Mahmoud, (2002). Insurance Act, Bimeh Markazi Iran. Training and Publication Department. In Persian, pp. 65-
73. 
7 Various insurances, at least, commercial insurances were used in Arabian Peninsula before Islam. This may be the reason why 
the holy Prophet has not mention about it explicitly because he only entered economic subjects whenever necessary. 
8
Rastin Banking is operational true Islamic bank

 

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. 
9 Depositor is a real person or legal entity with a certain amount of fund (cash) requests Rastin PLS bank to participate in Rastin 
PLS Banking products through direct contact with Rastin PLS bank, or via internet and purchases Rastin Certificate of one of the 
Rastin PLS Banking products of a project. 
10

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. 
11

Assessments are actions which are done by bank for protection of depositor’s interests, identification of the entrepreneur’s 

skills, and economic, financial, executive, and technical justifiability of the concerned project in Rastin Banking. 
12 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 



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42 
  

of those looking for financing (entrepreneur) and according to contract; the obtained profit or loss is divided 

between depositor and entrepreneur. By receiving a commission, the bank provides capital management services for 

depositors, and invest their financial resources according to their choices and in return, provides them by Rastin 

Certificate. The bank should use all his specialized potentialities to protect depositors' rights. So the bank starts 

monitoring
14

 the project by the trustee unit
15

 of the PLS office
16

. 

Rastin PLS Base system17 is the primary process and includes the general rules of Rastin Profit and Loss Sharing 

Banking system. Rastin 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 most of the rules of 

Rastin PLS Base system are extended to its financial subsystems as well. These subsystems have their own financial 

and regulatory processes and are as follows: 

a. Joalah Financial Sharing (JFS)18 

b. Mudarabah Financial Sharing (MFS)19 

c. Installment Financial Sharing (IFS)20 

d. Rent Financial Sharing (RFS)21  

e. Bail Financial Sharing (BFS)22 

f. Rastin Group Funding (RGF)23 

g. Rastin Personal Security (RPS)
24

  
h. Rastin Social Takaful25 (RST)26  

                                                                                                                                                                                                    
approved, proposal will be a reference source against entrepreneur executive operations.   
13

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. 
14

Monitoring is an action which is done by bank for protection of depositor’s interests and good performance of executive 
operation in Rastin Banking. Bank is obliged to take measures for good operational performance. Standards for monitoring are 

based on Rastin Banking articles of the executive bylaw.  
15

Trustee unit is a unit at PLS office 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. 
16

PLS Office: It is a bank department that along with subordinate units manages participation processes in Rastin Banking.  
17Bidabad, Bijan (2013) Rastin Profit and Loss Sharing (PLS) Base System. Journal of Islamic Economics, Banking and Finance, 
pp. 32-57, Vol. 9 No. 4, Oct - Dec.  
http://ibtra.com/pdf/journal/v9_n4_article2.pdf 
18 Bijan Bidabad, Joalah Financial Sharing (JFS). Journal of Islamic Economics, Banking and Finance, Volume-12, 

No. 1, January-March, 2016, pp. 33-48. 

http://www.bidabad.com/doc/jfs-paper-en.pdf 
http://ibtra.com/pdf/journal/v12_n1_article2.pdf 
19 Bidabad, Bijan, Mudarebah Financial Sharing (MFS). Journal of Islamic Economics, Banking and Finance, 

JIEBF, Volume - 10, Number - 1, January - April 2014, pp. 56-68. 
http://www.bidabad.com/doc/mfs-paper-en.pdf 
http://ibtra.com/pdf/journal/v10_n1_article3.pdf 
20 Bidabad, Bijan, Instalment Financial Sharing (IFS). Journal of Islamic Economics, Banking and Finance, 2014. 
http://www.bidabad.com/doc/ifs-paper-en.pdf 
21 Bidabad, Bijan, Rent Financial Sharing (RFS). Journal of Islamic Economics, Banking and Finance, 2014. 
http://www.bidabad.com/doc/rfs-paper-en.pdf  
http://ibtra.com/pdf/journal/v10_n2_article2.pdf 
22 Bidabad, Bijan, Bail Financial Sharing (BFS). Journal of Islamic Economics, Banking and Finance, 2014. 

http://www.bidabad.com/doc/bfs-paper-en.pdf  
23 Bijan Bidabad, Rastin Group Funding (RGF). Bank Melli Iran, Tehran, 2014. 
http://www.bidabad.com/doc/rgf-paper-en.pdf 
24 Bidabad, Bijan, Rastin Personal Security (RPS). Journal of Islamic Economics, Banking and Finance, JIEBF, 

Volume - 11, Number - 2, April - June 2015, pp. 47-61. 

http://ibtra.com/pdf/journal/v11_n2_article3.pdf 

http://www.bidabad.com/doc/rps-paper-en.pdf 
25 Takaful: is the humanistic duty of the society to fulfill the basic needs of the individuals and is devided into two parts: 
Public Takaful: is the humanistic duty of the individuals to fulfill other propels’ needs. Zeman Ialah: is the duty of the 

http://ibtra.com/pdf/journal/v9_n4_article2.pdf
http://ibtra.com/pdf/journal/v12_n1_article2.pdf
http://www.bidabad.com/doc/mfs-paper-en.pdf
http://ibtra.com/pdf/journal/v10_n1_article3.pdf
http://ibtra.com/pdf/journal/v10_n1_article3.pdf
http://www.bidabad.com/doc/ifs-paper-en.pdf
http://www.bidabad.com/doc/ifs-paper-en.pdf
http://www.bidabad.com/doc/rfs-paper-en.pdf
http://ibtra.com/pdf/journal/v10_n2_article2.pdf
http://ibtra.com/pdf/journal/v10_n2_article2.pdf
http://www.bidabad.com/doc/bfs-paper-en.pdf%20%0d
http://www.bidabad.com/doc/rgf-paper-en.pdf
http://www.bidabad.com/doc/rgf-paper-en.pdf
http://www.bidabad.com/doc/rps-paper-en.pdf


Copyright © CC-BY-NC 2019, CRIBFB | IJFB 

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43 
  

i. Sponsor Crowd Funding (SCF)27 

j. Peer to Peer Loan (PPL)28  

k. Rastin Swap Bond (RSB)29 

l. Rastin Swap Deposit (RSD)30  

m. Rastin Swap Card (RSC)
31

 

Rastin Certificates is a collection of designed certificates in Rastin PLS Banking Base system and its financial 
subsystems. These certificates are issued and delivered to depositor or financer instead of the received fund 

(deposit). Rastin Certificates (except Guarantee Certificate) are transferable and negotiable online through the Rastin 

Certificate Market (RCM) 32 of the bank and are issued with a nominal price and for a specified period. The owners 

of these certificates share the results of the project proportional to nominal price and participation period of the 

certificate. Various Rastin Certificates and their characteristics according to the kind of participation in the PLS 

Base system or its financial subsystems regarding the type of project and the used asset will be bound to Rastin 

Banking regulations. These certificates can be anonymous or named papers, except Guarantee Certificate that must 

be named. These certificates are: 

1- Partnership (Musharakah) Certificate: is an anonymous or named paper which expresses the participation of 

depositor in one of the PLS banking products with a defined value and is issued by bank for a specified period 

and its owner shares the profit and loss of the subject of participation proportional to its nominal value and 

duration of participation according to rules and regulations of Rastin PLS Banking. This certificate is used in 
Rastin PLS Base System. 

2- Subscripted (Pazireh) Certificate: is an anonymous or named paper which expresses the participation of 

depositors in one of the first or second kinds of PLS banking products with a defined value which is issued by 

bank for construction period for infinitude projects and its owner shares the profit and loss of the subject of 

participation proportional to its nominal value and duration of participation by becoming the shareholder of the 

company according to rules and regulations of Rastin PLS Banking. This certificate is used in Rastin PLS Base 

System. 

3- Future Certificate: is an anonymous or named paper that cites a commitment to deliver the commodity that is 

issued by the bank and can be negotiated and transferred to another purchaser. By this certificate, the 

entrepreneur or producer is committed to delivering the commodity to the certificate holder at maturity or sales 

the commodity and refund the sold amount to financer according to the contract. This certificate is used in 
Joaleh Financial Sharing (JFS) subsystem. 

                                                                                                                                                                                                    
government to provide the sustenance of the individuals in the society. 
26 Bidabad, Bijan, Rastin Social Takaful (RST). Journal of Islamic Economics, Banking and Finance, JIEBF, 

Volume - 11, Number - 1, January - March 2015, pp.: 13-23. 

http://ibtra.com/pdf/journal/v11_n1_article1.pdf 
http://www.bidabad.com/doc/rst-paper-en.pdf 
27 Bidabad, Bijan, Rastin Crowd Funding, 2014.  
http://www.bidabad.com/doc/rcf-paper-en.pdf 
28 Bidabad, Bijan, Rastin Crowd Funding, 2014.  
http://www.bidabad.com/doc/rcf-paper-en.pdf 
29 Bidabad, Bijan, Abul Hassan, Ben Ali Mohamed Sami, Mahmoud Allahyarifard. Interest-Free Bonds and Central 

Banking Monetary Instruments. International Journal of Economics and Finance. Vol. 3, no. 3, Aug 2011, pp.234-

241. 
http://www.ccsenet.org/journal/index.php/ijef/article/download/11665/8300 
Bidabad, Bijan, Abul Hassan, Ben Ali Mohamed Sami, Mahmoud Allahyarifard. Interest-Free Bonds Financial 

Innovation, A Monetary Instrument for Economy at Crisis. Journal of Economic Cooperation and Development 

(JECD). 32, 1, 2011, 55-70. 
http://www.sesric.org/jecd/jecd_articles/ART10102201-2.pdf 
30 Bijan Bidabad, Rastin Swap Deposit. Tehran, 2015. 
http://www.bidabad.com/doc/rsd-paper-en.pdf 
31 Bijan Bidabad, Rastin Swap Card. Tehran, 2015. 

http://www.bidabad.com/doc/rsc-paper-en.pdf 
32 Rastin Certificate Market is a web-based settlement system for transaction and transfer of Rastin Certificates and valuable 

papers of Rastin bank.  

http://ibtra.com/pdf/journal/v11_n1_article1.pdf
http://www.bidabad.com/doc/rst-paper-en.pdf
http://www.bidabad.com/doc/rst-paper-en.pdf
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://www.ccsenet.org/journal/index.php/ijef/article/download/11665/8300
http://www.ccsenet.org/journal/index.php/ijef/article/download/11665/8300
http://www.sesric.org/jecd/jecd_articles/ART10102201-2.pdf
http://www.sesric.org/jecd/jecd_articles/ART10102201-2.pdf
http://www.bidabad.com/doc/rsd-paper-en.pdf
http://www.bidabad.com/doc/rsd-paper-en.pdf
http://www.bidabad.com/doc/rsc-paper-en.pdf%0d


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4- Mudarabah Certificate: is an anonymous or named paper which expresses the participation of depositor in 

profit and loss of a particular project (Product I) of the PLS banking products with a defined value and is issued 

by bank for specified period and its owner shares the profit and loss of the subject of participation proportional 

to its nominal value and duration of participation according to rules and regulations of Rastin PLS Banking. 

This certificate is used in Mudarabah Financial Sharing (MFS) subsystem.  

5- Periodic Mudarabah Certificate: is the same as Mudarabah Certificate, but the return of the project is paid to 
depositor periodically. This certificate is used in Mudarabah Financial Sharing (MFS) subsystem. 

6- Mughasatah Certificate: is an anonym negotiable document issued by Rastin PLS bank with a nominal price 

for real financial participation (sharing) for a specified period. The bearer of this paper receives periodic 

payments relative to his share and the period of participation. Payments will be paid at the end of each period. 

In the end, the entrepreneur will own the project. This certificate obtains installment until the end of the 

contract, and after the settlement of the contract, the entrepreneur becomes the owner of the project. The 

settlement is after the payout of the last installment. This certificate is used in Instalment Financial Sharing 

(IFS) subsystem. 

7- Rental Mughasatah Certificate: is an anonym negotiable document with a defined nominal price for a defined 

period of time (rental tenure) issued by Rastin PLS bank, which conducts Rastin PLS activity. The owners of 

these certificates have right on the results of the sharing project which is proportional to the nominal value of 

the certificate and the duration of holding certificate until the end and receive periodic rent and installment of 
the valuation of the project at the end of each period. The settlement is after the payout of the last installment 

and rents for the certificate. At the end of the contract, the entrepreneur will become the owner of the project. 

This certificate is used in Instalment Financial Sharing (IFS) subsystem. 

8- Musharakah Mughasatah Certificate: is an anonym negotiable document with a defined nominal price for a 

defined period of time (Musharakah tenure) issued by Rastin PLS bank, which conducts PLS activities. The 

owner of this certificate has right on the result of the sharing project proportional to the nominal value of the 

certificate and the duration of holding the certificate until the end of the contract, and receive periodic 

installment plus income (positive/negative) yields of the project at the end of each period. After the payout of 

the last installment and the profit or loss (yield), the settlement takes place. In the end, the entrepreneur will 

become the owner of the project. This certificate is used in Instalment Financial Sharing (IFS) subsystem. 

9- Mortgage Sharing Certificate: is an anonym (nameless) negotiable document with a nominal price, which is 
issued for a specified period by a Rastin PLS bank. The holder of these certificates shares in the yield of the 

asset of the project proportional to his share to the nominal price of the assessed value of the asset considering 

his participation period. The principal and return of sharing of these certificates will be paid to the depositor at 

the end of the contract. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

10- Periodic Mortgage Sharing Certificate: is the same as Mortgage Sharing Certificate, but the return of the 

certificate is periodically paid to the certificate holder. This certificate is used in Rent Financial Sharing (RFS) 

subsystem. 

11- Mortgage Mudarabah Certificate: is similar to Mortgage Sharing Certificate, but this certificate is used for 

commercial financing services. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

12- Periodic Mortgage Mudarabah Certificate: is similar to Periodic Mortgage Sharing Certificate, but this 

certificate is used for commercial financing services. This certificate is used in Rent Financial Sharing (RFS) 

subsystem. 

13- Mortgage Muzaraah Certificate: is similar to Mortgage Mudarabah Certificates but for agricultural financing. 

This certificate is used in Rent Financial Sharing (RFS) subsystem. 

14- Periodic Mortgage Muzaraah Certificate: is similar to Periodic Mortgage Mudarabah Certificate but for 

agricultural financing. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

15- Mortgage Mugharasah Certificate: is similar to Mortgage Muzaraah Certificate but for planting and restoring 

tree gardens financing. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

16- Periodic Mortgage Mugharasah Certificate: is similar to Periodic Mortgage Muzaraah Certificate but for 

planting and restoring tree gardens financing. This certificate is used in Rent Financial Sharing (RFS) 

subsystem. 



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17- Mortgage Musaqah Certificate: is similar to Mortgage Muzaraah Certificate but for maintaining and 

harvesting fruit gardens financing. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

18- Periodic Mortgage Musaqah Certificate: is similar to Periodic Mortgage Muzaraah Certificate but for 

maintaining and harvesting fruit gardens financing. This certificate is used in Rent Financial Sharing (RFS) 

subsystem. 

19- Mortgage Istisna Certificate: is similar to Mortgage Muzaraah Certificate but for financing industrial and 
agricultural firms. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

20- Periodic Mortgage Istisna Certificate: is similar to Periodic Mortgage Muzaraah Certificate but for financing 

industrial and agricultural firms. This certificate is used in Rent Financial Sharing (RFS) subsystem. 

21- Rent Certificate: is an anonym negotiable document, which is issued with a defined nominal price and for a 

certain period by Rastin PLS bank. The owner of this certificate shares the rent of asset proportional to its 

assessed asset nominal price. The rent will be paid to depositor periodically, but the original fund plus the rent 

will be paid to the depositor at the end of the contract period. This certificate is used in Rent Financial Sharing 

(RFS) subsystem. 

22- Guarantee Certificate: is a named document which shows the guarantee of a certain amount of money and is 

issued by notary upon the mortgaged asset and if the obligation is not fulfilled, the owner must compensate it. 

Otherwise, the mortgaged asset will be sold through auction, and the claim of the acceptor will be settled. This 

certificate is used in Mortgage Securitization System (MSS). 

23- Bail Certificate: is an anonym negotiable paper with a defined face value and duration issued by Rastin PLS 

bank branch. The owner of this certificate will receive the commodity or its price (at market price) from the 

entrepreneur who is obliged for this certificate. This certificate is used in Bail Financial Sharing (BFS) 

subsystem. 

24- Social Security Certificate: is an anonym or named negotiable document with defined nominal price issued 

and for a specified period given to the insured person by Rastin PLS bank on behalf of the security fund in 

exchange for payment of insurance premium to the security fund. The holder of this certificate shares the fund 

capital proportionate to the value and shares the fund returns proportionate to the amount and duration of his 

certificate. This certificate is used in Rastin Personal Security (RPS) subsystem. 

25- Personal Security Certificate: is an anonym or named negotiable document with defined nominal price and 

maturity, and is issued by Rastin PLS bank on behalf of the pension fund for depositor by the request of the 
pension fund and equal to the amount of the deposited deposit. The holder of this certificate shares the capital of 

the fund in proportion to his deposit and shares the return of the pension fund proportional to the amount and 

duration of the deposit and receives his share (principal and profit) from the fund at maturity. This certificate is 

used in Rastin Personal Security (RPS) subsystem. 

26- Pension Security Certificate: is an anonym or named negotiable document, which is issued from changing the 

share of the depositor into several small lots at maturity, so that the holder can receive continuous pension 

payments from the fund. The return of this certificate will be calculated and paid to depositor according to 

Rastin Participation Accounting procedures for Joint Stock Company with Variable Capital (JSCVC).33 On the 

other hand, if depositor or the owner of the certificate does not want to receive back his share and return from 

the fund in a lump sum at maturity, he can ask the fund to change his certificate into several smaller certificates 

with continual maturities and amounts via the agent bank. This certificate is used in Rastin Personal Security 

(RPS) subsystem. 

27- Takaful Certificate: is an anonym or named negotiable document with a defined face value and term, which is 

issued by Rastin PLS bank branch. The owners of these certificates give a choice to Rastin PLS bank to use 

their deposits for granting to needy people graciously for a certain period and report his activities to the 

                                                             
33

Joint Stock Company with Variable Capital (JSCVC): is a kind of fund in which the capital of fund varies along time 
through entering or exiting new shareholders and by changing their capital shares, or duration of sharing in fund. These funds can 

facilitate the operations of mutual funds, credit unions and bank sharing activities. 
Bijan Bidabad, Joint Stock Company with Variable Capital (JSCVC), International Journal of Law and 

Management, Vol. 56, Iss: 4, pp.302 – 310, 2014.  

http://dx.doi.org/10.1108/IJLMA-09-2012-0031 

http://dx.doi.org/10.1108/IJLMA-09-2012-0031


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46 
  

depositor and supervisory authorities. This certificate is used in Rastin Social Takaful (RST) subsystem. 

28- Loan Certificate: is an anonym or named negotiable document with a defined face value and term that is issued 

by Rastin PLS bank. The owners of these certificates give a choice to the bank to use their deposits for 

extending interest-free loans to needy people for a specific period, and return the principal money back to the 

depositor after that period and report his activity to the depositor and supervisory authorities. This certificate is 

used in Rastin Social Takaful (RST) subsystem. 

The complementary systems in Rastin Banking refer to innovations, systems, and complementary methods to solve 

specific shortages in the banking process as follows: 

a. Rastin Certificate Market (RCM)34 

b. Crowd Funding System (CFS)35 

c. Operation Control and Monitor (OCM) 

d. Collateral Registration System (CRS)  

e. Serial Commitments Clearance (SCC)36 

f. Mortgage Securitization System (MSS)37 

g. Interbank Withdrawal Protocol (IWP)38 

h. Non-Usury Scripless Security Settlement System (NSSSS)39 

i. Money Laundering Detection System (MLD)40 

All the above systems and instruments have different risk treatments and should be used by insurance measures to 
cover the risks of the projects failure and hedge the financial resources and benefits of the sides of the contracts.  

Insurance Products in Rastin Banking 

Financial activities of Rastin Banking need new insurance products and policies. In addition to prevailing 

insurances, some new insurance products were mentioned here. To safeguard the interests of depositors and to 

decrease risk and cover the probable losses of financial activities and also to alleviate confidence of the parties to 

Rastin PLS Banking contracts, some insurance coverage has been anticipated as follows: 

1. Rastin Certificate Insurance: By paying a fee, bank or depositors can ask insurer companies to insure the 

total or a portion of the nominal value of their Rastin Certificate according to the request of the depositor or Rastin 

Certificate holder in charge and interest and name of the depositor or Rastin Certificate holder. Bank and insurance 

company can offer Rastin Certificate insurance rate and policy in Rastin Certificate Market web portal. Insuring 

Rastin Certificate is optional for the depositor in Rastin Banking.  

2. Insurance of Market Value of Rastin Certificate: Rastin Certificate holder can insure his certificate against 

market price fluctuations at a higher price than nominal value in his charge and interest and name. This insurance is 

also optional. 

                                                             
34Bidabad, Bijan (2013) Rastin Certificate Market (RCM), Complementary System of Rastin Banking

 

http://www.bidabad.com/doc/rastin-bank-rcm-en.pdf 
35 Bidabad, Bijan, Rastin Crowd Funding, 2014.  
http://www.bidabad.com/doc/rcf-paper-en.pdf 
36 Bijan Bidabad, Serial Commitments Clearance (SCC) in Rastin Banking. International Journal of Law and 

Management, Vol. 57, Iss: 6, 2015, pp. 600-609, Emerald Group Publishing Limited.  
http://dx.doi.org/10.1108/IJLMA-02-2015-0007 
37 Bijan Bidabad, Mortgage Securitization System (MSS), A Complementary System of Rastin Banking. 

International Journal of Law and Management, Vol. 59 Iss: 3, 2017. 
http://www.bidabad.com/doc/mss-paper-en.pdf 
38 Bidabad, Bijan, Mahmoud Allahyarifard. Interbank Withdrawal Protocol (IWP), Complementary System of 

Rastin Banking, 2013.  
http://www.bidabad.com/doc/iwp-paper-en.pdf 
39 Bidabad, Bijan, Mahmoud Allahyarifard. IT Based Usury Free Financial Innovations. Proceeding of ECDC 2010, 

5th International Conference on e-Commerce in Developing Countries: with focus on e-Banking & e-Insurance. 

ECDC 2010, 15-16 September 2010. 
http://www.bidabad.com/doc/non-usury-finance-it-en.pdf 
40Bidabad, Bijan, (2017) Money Laundering Detection System (MLD), Complementary System of Rastin Banking, Journal of 
Money Laundering Control, Emerald Group Publishing Limited. 

http://www.bidabad.com/doc/rastin-bank-rcm-en.pdf
http://www.bidabad.com/doc/rastin-bank-rcm-en.pdf
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://www.bidabad.com/doc/rcf-paper-en.pdf%0d
http://dx.doi.org/10.1108/IJLMA-02-2015-0007
http://dx.doi.org/10.1108/IJLMA-02-2015-0007
http://www.bidabad.com/doc/mss-paper-en.pdf
http://www.bidabad.com/doc/mss-paper-en.pdf
http://www.bidabad.com/doc/iwp-paper-en.pdf
http://www.bidabad.com/doc/iwp-paper-en.pdf
http://www.bidabad.com/doc/non-usury-finance-it-en.pdf
http://www.bidabad.com/doc/non-usury-finance-it-en.pdf


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3. Responsibility/Engineering Insurance: Responsibility/engineering insurance for covering probable losses of 

unexpected technical and human accidents during the execution of the project period is compulsory for 

entrepreneurs of Rastin PLS projects. The entrepreneur must buy corresponding insurance policies to cover the 

unexpected accidents in his charge and interest and name. 

4. Insurance of Accidents Concerning the Article of Sharing: Entrepreneur must insure the article of sharing 

against natural calamities, fire accident, explosion, and other unexpected accidents at least equal to the amount of 
provided and used sources in charge of the project, and in interest and name of the bank. This insurance fee is an 

acceptable cost item for the project. 

5. Collateral Insurance: Entrepreneur must insure his provided collaterals in charge of himself and interest and 

name of the bank at least equal to the value of bank share in the project during the project execution period. The 

entrepreneur must reinsure the collateral until the end of the execution period so that the collaterals should be 

insured for all times of the execution period. 

6. Loss Margin Insurance: Entrepreneur can insure the project against probable loss equal to the amount of loss 

he expects. This insurance is optional or compulsory in various Rastin PLS Banking Subsystems. In the case of 

being compulsory, the entrepreneur is responsible for compensating the occurred losses according to the regulations 

of that subsystem if he had not bought the necessary insurance policy. 

7. Profit Margin Insurance: In order to guarantee the probable profit margin, an entrepreneur can insure this 

margin in his charge and interest and name. This insurance is optional or compulsory according to different Rastin 
PLS Banking Subsystems applications. 

8. Merchandise Transportation Insurance: Contract parties can insure the merchandises of the article of 

contract against probable risks of transportation, by mutual agreement. The assessment unit41 of the PLS department 

of the bank will determine the necessity of this insurance, according to the Financial Subsystem used. If the 

transported commodity, raw material, and intermediate goods comprise the interests of both parties, this insurance 

will be compulsory for both sender and receiver of the goods. The parties should provide this insurance policy at a 

specified time determined by the assessment unit in charge of sender and receiver and in name and interest of the 

bank.  

9. Production Equipment and Installations Insurance: For better safety and performance of Rastin PLS 

Banking activity, an entrepreneur can insure his production equipment and installations against fire accidents, 

explosion, natural accidents, and calamities, and the risk concerns of the second party at his own charge, interest, 
and name. According to the applied Financial Subsystem, assessment unit of the PLS department of the bank will 

determine the compulsion or optionality of this insurance.  

10. Product Quality Insurance: In order to ensure the quality of the produced goods and attracting buyers, an 

entrepreneur can insure the quality of his products according to conventional standards. The subject of this insurance 

policy is compensation of probable vital and financial losses to consumers, and a third party regarding the produced 

commodities because of unsafe, defective, and shortcomings processes of production. This insurance policy is 

optional. 

11. Insurance of Commodity under Production: Entrepreneur must insure the producing commodity at least 

equal to the nominal value of the raw material bought or delivered, besides an insurer company confirmed by the 

bank for production period, in charge of entrepreneur and in name and interest of the bank. 

12. Inventory Insurance: For better safeguarding of performance of Rastin PLS Banking activities, an 

entrepreneur can insure the raw materials and products inventories against risks of a fire accident, explosion, natural 
accidents and calamities, theft and also other party’s risk concerns at his charge, name, and interest. According to 

the applied Financial Subsystem, the assessment unit of the PLS office of the bank will determine the compulsion or 

optionality of this insurance.  

13. Production Limited Loss Insurance: If the market or estimated price of the construction project (at the end of 

construction period) is less than its cost price, “production limited loss insurance” can be used to compensate the 

loss. 

                                                             
41 - Assessment unit is a unit in PLS office of Rastin PLS bank which assesses the competence and capabilities of entrepreneur 

and his proposal. 



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48 
  

14. Transaction Limited Loss Insurance: Entrepreneur can insure the risk of transaction activities equal to the 

amount he is concerned about probable failure in his transaction activity at his own charge, name, and interest. If an 

entrepreneur does not insure this risk, he will bear the likely risk.  

15. Transfer of Money Insurance: Bank can insure the risk of transfer of money equal to the amount he is 

concerned about probable failure in money transaction at his own charge, name, and interest. If the bank does not 

insure this risk, he will bear the probable risk.  

It is possible to use coinsurance and reinsurance in all above cases. The insurer can use these kinds of insurances to 

pro rata the aftermaths of the occurred risks. In coinsurance, several companies will jointly insure a risk. This 

insurance is usually used to cover large risks such as fire accident or explosion and similar things in factories, and 

each insurer company bears a portion of the risk. In reinsurance, the first (direct) insurer company covers a portion 

of the risk, and the second insurer company will cover the remaining risk. In other words, the direct insurance 

company will insure a portion of the risk in another company. 

Complementary insurances are a kind of insurance used by insuring companies to obtain more support for other 

accidents concerning the article insured. This is different from double insurance, which is referred to as multiple 

coverages of an item insured. By considering the applied Financial Subsystem, the assessment unit of the PLS office 

will define the necessity and kind of needed insurance before signing contracts. Several types of insurances as 

complementary insurances can be used. The necessary insurances for various Financial Subsystems are documented 

in Draft of Operational Bylaw of Rastin Banking
42

. 

The listed insurance products have no conflict with well-known legal principles. Insurer companies can supply these 

insurance policies according to their actuary calculations to the bank, depositor, and entrepreneur.43  

References 

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Lambert Academic Publishing, OmniScriptum GmbH & Co. KG, ISBN: 978-3-659-54463-7. 

 

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www.cribfb.com/journal/index.php/ijfb                           Indian Journal of Finance and Banking                                            Vol. 3, No. 1; 2019 

 

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Bidabad, Bijan, (2019) Interest-Free Treasury Bonds (IFTB). Interest-Free Treasury Bonds (IFTB). International 

Journal of Shari’ah and Corporate Governance Research, 2(2), 13-21. 

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Development (JECD). 32, 1, 2011, 55-70. 

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States).  
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Bidabad, Bijan, (2019) Installment Financial Sharing (IFS): A Financial Subsystem of Rastin PLS Banking. 

International Journal of Islamic Banking and Finance Research, 3(1), 28-42.  

https://www.cribfb.com/journal/index.php/ijibfr/article/view/267 

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Accounting & Finance Review, 4(1), 29-34. 

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No. 2, pp.: 38-53, April-June 2014. 

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Bidabad, Bijan, (2015) Rastin Social Takaful (RST). Journal of Islamic Economics, Banking and Finance, JIEBF, 

Volume - 11, Number - 1, January - March 2015, pp.: 13-23. 

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Management (IJLMA), Vol. 56, Iss: 4, pp.302 – 310, 2014.  

http://dx.doi.org/10.1108/IJLMA-09-2012-0031  

http://www.bidabad.com/doc/vjsc-paper-en.pdf 

 

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and Finance, pp. 32-57, Vol. 9, No. 4, Oct-Dec 2013. 
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http://www.bidabad.com/doc/pls-base-en.pdf  

 

Bidabad, Bijan, (2017) Money Laundering Detection System (MLD), A Complementary System of Rastin Banking, 

Journal of Money Laundering Control, Vol. 20 Issue: 4, pp. 354-366, 2017.   

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Bidabad, Bijan, (2014) General Characteristics of Rastin Banking. Proceeding of the 3rd International Conference 

on Economics, Political, Law and Fiscal Sciences (EPLS '14), World Scientific and Engineering Academy and 

Society (WSEAS). Transilvania University of Brasov, Brasov, Romania, June 26-28, 2014. 

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Bidabad, Bijan, (2013) A glance at Rastin Banking, 2013.  

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Bidabad, Bijan, Rastin Banking, New Operational Islamic Banking System (A bird's eye view). Islamic Finance 

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Bidabad, Bijan, (2019) Islamic Monetary Policy, 2013. International Journal of Islamic Banking and Finance 

Research, 3(2), 1-16, 2019. 
https://www.cribfb.com/journal/index.php/ijibfr/article/view/269  

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Bidabad, Bijan, (2019) Rastin Certificate Market (RCM), Complementary System of Rastin Banking, 2013. 

International Journal of Islamic Business & Management, 3(1), 35-43. 

https://www.cribfb.com/journal/index.php/ijibm/article/view/260    

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Bidabad, Bijan, (2019) Sovereign Wealth Fund Asset and Liability Management by Rastin Banking Financial 

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Bidabad, Bijan, Roohollah Mohammadi; Mahshid sherafati, (2013) Social Takaful and Qard ul-Hassanah Banking 

Convergences (A Functional Approach), Journal of Applied Science and Agriculture (JASA) November issue 

2013.  

http://www.bidabad.com/doc/takaful-en.pdf 
 

Bidabad, Bijan, (2019) Change Management of Banking System at National Level by Rastin Banking (Knowledge 

Management, Empowerment, Prune and Graft, and Apprenticeship). Review of Behavioral Aspect in 

Organizations and Society, 1(1), 57-70. 

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