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Islamic microfinance dr shahid raza
 

Islamic microfinance dr shahid raza

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    Islamic microfinance dr shahid raza Islamic microfinance dr shahid raza Presentation Transcript

    • International Conference onIslamic Microfinance
      Organized By :
      CENTER OF ISLAMIC BANKING & ECNOMICS
      Held At:
      Faisal Auditorium Islamabad
    • ISLAMIC MICROFINANCECHALEENGES AND OPPORTUNITIES
    • ISLAMIC FINANCE & MICRO FINANCE
      Islamic economic goals of;
      equality, fairness, social solidarity through risk sharing, property rights, and the sanctity of contracts; entrepreneurship, partnership, income generation through productive activity for poverty alleviation are consistent with elements of Micro Finance.
      A successful marriage of both in Islamic Microfinance should reinforce each other.
    • DISCONTENTS OF IF & MF IN PRACTICE
      Islamic financial services industry has shown little interest in MF and poverty alleviation aiming for Shariah compliance in form not in spirit.
      Conventional MF industry has shown inadequate interest in religious and cultural sensitivities; also largely excludes the poorest of the poor.
      Islamic MF for enhancing financial inclusion
    • ISLAMIC MICRO FINANCE EXPERIMENTS
      MENA: Sanadiq at Jabal al-Hoss, SYRIA
      Mu’assasatBayt Al-Mal in LEBANON
      HodeidahProgram in YEMEN
      IBBL, SIBL in BANGLADESH
      Akhuwatin PAKISTAN
      Manarain INDIA
      FINCA in AFGHANISTAN
      Amana Ikhtiarin MALAYSIA
      BPRS, BMTs in INDONESIA
      AzaouadFinance in NORTHERN MALI
    • Issues of Islamic Microfinance
      Sustainability
      Most of the programs are not sustainable in Pakistan
      Overall Operational and Financial Sustainability records at 89% and 74%, respectively.
      High interest rates eats up sustainability of clients
      Transparency
      Flat interest rates, un-explained fees, hidden charges
      High Cost Debt Economy than Real Economy
      Separates finance from real economy
      Absence of cooperation when client loses
      Exclusion
      Self-exclusion due to prohibition of interest
      Poorest of the poor and Women in gender segregated societies
    • Role of Islamic Microfinance
      Developing social capital among clients and MFI, instead of clients only
      Meeting Demand For Islamic Microfinance
      Promoting Entrepreneurship
      Debt not allowed in Islam as usual practice
      Asset creation and entrepreneurship is promoted
      Transparency and Sanctity of Contracts
      Islamic values prevent violation of contract and require disclosure of full knowledge relating to financial transaction
    • Issues for Islamic Microfinance
      Regarding MFIs
      Limited number of IMFIs (i.e. 4 – 6)
      Limited resource base of IMFI
      Ineligibility of collecting savings
      Product concentration in Murabaha
      Capacity building of MFI
      Sharia advisory
      Regarding Islamic banks
      Perception about microfinance as high risk area
      Informal sector environment
      Absence in rural areas
      Absence of credit guarantee scheme
    • Recommendations
      Corporate Social Responsibility: Fard al Kafaya
      Business case:Profits and high rate of recovery
      Limitations: Informal sector/regulatory implications, absence in rural areas
      Possible Course of Action:
      Phase – I:
      Linkage with MFIs [Mudaraba or Musharaka]
      Urban Operation through Islamic MF Division or Cell
      Phase – II
      Linkage continues
      Extension of branches in rural areas
    • Thank You
      CENTER OF ISLAMIC BANKING & ECNOMICS
      Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056E-mail : info@alhudacibe.com
      Web: http://www.alhudacibe.com