16 Asyraf Wajdi Dusuki, … Most of the Muslim majority countries today suffer large-scale human developmental crises. Together with a colleague, Professor Malcolm Harper, I have just spent the past few months researching and editing a book on Islamic microfinance – which is defined as Shari’ah compliant financial services for poor people. An important area for the Islamic finance industry, therefore, is the adaptation of Islamic financial products to join in the development of microfinance to bring the initial objective of poverty alleviation back into the industry's focus. Despite a real appeal in Moslem countries, Islamic microfinance represents less than 1% of global microfinance. Islamic microfinance (IMF) is becoming the most popular source for poverty alleviation in the world, especially in the developing countries. Islamic Micro Finance as effective tool of poverty alleviation. More recently, from 28-30 of June, 2011, sixty-one participants from 25 countries participated in an online “Discussion Corner” organized by USAID on the subject of Islamic Banking and Microfinance Dr Ajaz Ahmed Khan Senior Microfinance Advisor, CARE International. Islamic Microfinance Finance & its Product Mechanism. Nevertheless, the yardstick of microfinance success lies in its actual performance versus its raison d’être of poverty alleviation, i.e. Islamic finance, “emerged in the early 1960s to provide alternative financial contracts that confirmed to Sharia principles of Islam” such as interest free loans. While conventional microfinance has taken the lead, it is providing non-Sharia'ah compliant offerings that millions of low-income Muslims reject. Islamic microfinance providers also require a better legal and regulatory framework, not only to monitor their activities, but also to encourage them to experiment, innovate and develop. Islamic Aid has been working on Islamic microfinance for more than 10 years helping poor people to increase their incomes and make their futures more secure, without compromising their religious beliefs. Islamic microfinance has also been growing remarkably, but only a few studies analysed the role of Islamic micro-financing in the socio-economic development in one country. The study's goal is that a maximum of people have access to microfinance facilities and services to reduce poverty. Currently Islamic microfinance is concentrated in a few countries, with Indonesia, Bangladesh, Pakistan and Afghanistan ranking in the top. In accordance with Islamic law, any element of usury must be avoided entirely in economic transactions, hence resulting in the imposition of management fees on the borrowers instead of interest. The “Islamic Microfinance Challenge” was one of the major revelations to kick off the plan. PRESENTED BY – A free PowerPoint PPT presentation (displayed as a Flash slide show) on PowerShow.com - id: 3edba1-NTg5N ‘the extent to which it alleviates poverty levels of its existing and potential customers’ [58] ; p. 173). Thus, Islamic microfinance concept had been developed as alternative for Muslim borrowers; based on Islamic financial contracts . Islamic microfinance has difficulty in developing. and is among a handful of microfinance institutions in the Arab World providing Islamic financial services. Islamic finance, whether “micro” or not, is organising its financial services to comply with Islamic law. Islamic microfinance attempts to capture the spirit of Sharia law by allowing financial tools that create and maintain a just economic system -- one that protects clients through built-in mechanisms like risk sharing. #Difference_Between_Conventional Micro-finance_&_Islamic_Microfinance #Islamic_Microfinance_kia_hay? Islamic microfinance is a specialized part in a growing and diverse body of microfinance literature. #Islamic_Microfinance_kia_hay? Islamic microfinance programmes cannot therefore imitate conventional microfinance programmes and are obliged to provide finance without charging interest. Islamic Microfinance Muslim Aid Sri Lanka’s Islamic Microfinance programme is being running with the vision of alleviating both, poverty and dependency syndrome existing within the conflict affected poor. Islamic microfinance represents the ultimate opportunity for Islamic finance to live up to its potential. Islamic law emphasizes moral and ethical values in all dealings, prohibiting the payment or receipt of interest (riba). Islamic Microfinance is a type of banking services that focus to a target group of low income individuals or groups who does not have other access to financial services. Then Islamic microfinance products have been examinated and make possible now the creation of new products in line with the existing ones. of global microfinance despite a global Muslim population of about 1.2 billion. Islamic Microfinance is a type of financial service that is guided by the principles of Islamic (Shari’ah) law. Islamic Microfinance is a sector with a great potential to expand. Can Islamic microfinance as it grows maintain its original spirit of fairness, transparency and sharing, principles that seem to have been almost forgotten in the world of conventional microfinance? To date, there are quite a few papers on Islamic microfinance that are published in reputable journals, which fairly represent the size of Islamic microfinance industry compared to the overall microfinance sector. Despite the call for Islamic microfinance, there has been very little academic research on the topic. Microfinance conventionally provides services to underprivileged entrepreneurs and works toward poverty alleviation but what’s good to know is whether the Islamic microfinance institutions are really making a change. #Difference_Between_Conventional Micro-finance_&_Islamic_Microfinance #Mudarbha_and_Musharka #Murabha #Islamic_Trade #Islamic_Sale_and_Purchase. Kiva believes in supporting products that are culturally compatible and … Trade Based Modes of Islamic Microfinance ( Murabahah, Salam, Istisna etc.) For the sake of readers we will cite some definitions of microfinance given by some authors, which It also prohibits investment in businesses dealing in pigs, alcohol and gambling, among others. However, this does not mean that capital is free of charge, that it should be made available without any … This chapter seeks to study the issues and challenges faced by Islamic microfinance institutions in … Microfinance is simply a poverty alleviation model used to provide micro lending capital to the poor. Islamic Aid’s programmes work hard to ensure that poor people have access to the financial tools and training they need to help lift themselves out of poverty. By Tasnim Nazeer Islamic microfinance is becoming an increasingly popular mechanism for alleviating poverty, especially in developing countries around the world. Perhaps the earliest Islamic microfinance attempt in modern times was that of Mit Ghamr banks in Egypt in the early 1960s. Microfinance is a banking service that is provided to unemployed and low-income individuals who have no other means of gaining financial services. The Islamic finance industry as a whole is expected to reach over $2 billion dollars in 2012 and is a continually growing sector due to its ethical principles and prohibition of riba (interest). First, Islamic microfinance has a two-part definition. Al Amal, Winner of the Islamic Microfinance Challenge 2010 Al Amal provides various financial services and products (Islamic financing, savings, solidarity insurance, etc.) Islamic microfinance is nothing more than the conventional microfinance less the interest. To the best of our knowledge, there were no previous studies that compared Islamic and conventional MFIs in this manner. Islamic Microfinance Innovations & Opportunities in Underdeveloped CountriesApril 25, 2012Alhuda-CIBE TrainingsAvari Towers, Karachi. The nexus between Islamic banking and microfinance has been previously discussed, addressing interest free lending while promoting fairness and ethical practices in accordance with Islamic law. #Mudarbha_and_Musharka #Murabha #Islamic_Trade #Islamic_Sale_and_Purchase. Informative & Scope Services and challenges of Islamic microfinance by Samar Al-Montser. This microfinance fund based on wakalah model will be managed by a separate company that will be paid management fees and it will not participate in the fund.19 Leveraging on Wilson’s wakalah model, Abdul Rahman suggested that this model could be used by Islamic banks for implementation of microfinance activities.20 9.3 What is Islamic Microfinance all about? There have been even fewer attempts at implementing Islamic-compliant microfinance products, however. Due Islamic microfinance, having a unique feature compare to the con-ventional counterpart, offers a potential solution to poverty al-leviation. Islamic Micro Financial Products Mechanisms & Compatibility with Conventional Microfinance Products. Suddenly, the whispers stated blow sounding, Why Islamic Microfinance is not scaling up? According to the 2008 Consultative Group to Assist the Poor (CGAP) survey, Islamic microfinance accounts for about 0.5 per cent. Jul 8, 2012 - Introduction to Islamic Microfinance Islamic Microfinance is expected to reach over $2 billion dollars in 2012. It is estimated that 72% of the population living in predominantly Muslim countries do not use financial services, because they do not follow the precepts of Islam. Although Islamic finance was originally re-introduced to fight poverty, this objective fell down on the industry's agenda. Islamic banking or Islamic MFI,s base on Shria’s can also apply on micro-scale in order to poverty reduction (Zahidzamir, 2011; Ehsan, Feroz, 2008; Ashraf, 2007). 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