Shari’ah Foundation and
Application of Islamic
Microfinance
Presented at

Global Islamic Microfinance Forum - Dubai
Presen...
Outline
1)
2)
3)
4)
5)
6)
7)
8)

Islam / Shari’ah and Faqeir
Treatment of Financially Distressed in Islam
Protection of Fr...
Islam and Faqeir
Islam treats Faqeir according to his need and
extent of poverty Faqeir is subjected to.
Three types of Fa...
F. Distressed & Cap. of Earning
 Man born with some inalienable (absolute)
rights.
 That are recognized by majority of t...
Excess to no. 2 & 3 by Islam
Financially Distressed
 Support and provision of funds to meet one’s
needs enabling the dist...
Islamic Economic prosperity
 Islam postulates the concept of welfare state
to work for the economic prosperity.
 Economi...
Protection of freedoms
There are five kinds of Freedoms
1.
2.
3.
4.
5.

Freedom of social opportunities,
Freedom of transp...
Economic Freedom
To get credit;
Are begging, being dependant on charity and / or

being under debts supported and encourag...
Faqeir in MENA Region
 About 70 million;
< US$ 2 per day and
 20 million;
< US$1.25 per day.
• 95% of the adults residin...
Main Issue with Muslim Traders
• The main issue here is that many Muslimheaded households and micro, small, and
medium ent...
Faqeir in MENA Region
• Increasing access to Shari’ah compliant
or Islamic law, and the use of various
financial services ...
Islamic Legal System
The Islamic legal system has guidelines and regulations
pertaining to the financial transactions of M...
Final Word
As repeatedly mentioned in such gathering:
‘If you give a man a fish you feed him for one
day’ But ‘if you teac...
192 Ahmad Block, New Garden Town, Lahore - Pakistan.
Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056
Email: info@alhudaci...
3rd Global Islamic Microfinance Forum' 2013
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AlHuda-Centre of Islamic Banking and Economics (CIBE) is a well known name in Islamic Banking and Finance sector which focuses on training, awareness, advisory and publications on Islamic Banking & Finance in order to promote the industry. AlHuda CIBE has organized a successful Conference "3rd Global Islamic Microfinance Forum" held on 6th & 7th October, 2013 in Dubai. AlHuda CIBE is very much pleased to share the topics and presentations being held in the Forum.

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3rd Global Islamic Microfinance Forum' 2013

  1. 1. Shari’ah Foundation and Application of Islamic Microfinance Presented at Global Islamic Microfinance Forum - Dubai Presented on 06 October, 2013 By: Mufti Aziz Ur Rehman mufti.aziz.89@gmail.com 2
  2. 2. Outline 1) 2) 3) 4) 5) 6) 7) 8) Islam / Shari’ah and Faqeir Treatment of Financially Distressed in Islam Protection of Freedom MENA Region and poverty Main issue with Muslim Traders IFIs and awareness Recommendations Final Words Mufti Aziz Ur Rehman 3
  3. 3. Islam and Faqeir Islam treats Faqeir according to his need and extent of poverty Faqeir is subjected to. Three types of Faqeir; 1. Incapable of Earning A Social Security System of Islam. Baitul Mall, Zakat.etc. 2. Financially Distressed 3. Capable of Earning Mufti Aziz Ur Rehman 4
  4. 4. F. Distressed & Cap. of Earning  Man born with some inalienable (absolute) rights.  That are recognized by majority of the nations but are enjoyed by very few people around the globe.  A set of these rights give rise to development, which everyone should ideally have access to. Mufti Aziz Ur Rehman 5
  5. 5. Excess to no. 2 & 3 by Islam Financially Distressed  Support and provision of funds to meet one’s needs enabling the distress to be eased. I mean; Give him Freedom from such situation Freeing captives or slaves, those in debts and to pay Diyyat money etc. Imam Abu Yousuf RA said; Mufti Aziz Ur Rehman 6
  6. 6. Islamic Economic prosperity  Islam postulates the concept of welfare state to work for the economic prosperity.  Economic Prosperity connotes betterment of standard of life through;  Enhanced capabilities  Reduced vulnerability (Liabilities) and  Protect Freedoms  lowness of income is a means for capability deprivation only Mufti Aziz Ur Rehman 7
  7. 7. Protection of freedoms There are five kinds of Freedoms 1. 2. 3. 4. 5. Freedom of social opportunities, Freedom of transparency guarantees, Freedom of protective security, Freedom of political and civil rights, and Economic freedom including opportunities to get credit. Since without freedom people cannot make the choices that allow them to help themselves and others. Mufti Aziz Ur Rehman 8
  8. 8. Economic Freedom To get credit; Are begging, being dependant on charity and / or being under debts supported and encouraged ? No but taking the Fifth Freedom “Economic freedom including opportunities to get credit” Now; how Islamic finance can enhance access, reduce vulnerability, augment capability and so reduce poverty? Of course Faqeir is to come near. Mufti Aziz Ur Rehman 9
  9. 9. Faqeir in MENA Region  About 70 million; < US$ 2 per day and  20 million; < US$1.25 per day. • 95% of the adults residing in MENA define themselves as religiously observant. Gallup survey • > 19 m avoided interactions with FFIs for religious reasons. (Reba) • A mere 18 % of adults (above 15) have accounts in FFIs, the lowest in the world. • 27% of adults in Tunisia and Morocco having no account at a FFI and 3 % of respondents in Kuwait & UAE (for only religious reason) Global Findex, 2011 Mufti Aziz Ur Rehman 10
  10. 10. Main Issue with Muslim Traders • The main issue here is that many Muslimheaded households and micro, small, and medium enterprises may voluntarily exclude themselves from Formal Financial markets because of religious requirements. Freedom? • The combination of above facts has produced a growing interest in IF as a possible tool for reducing poverty through financial inclusion among the religiously conscious Muslim population. Mufti Aziz Ur Rehman 11
  11. 11. Faqeir in MENA Region • Increasing access to Shari’ah compliant or Islamic law, and the use of various financial services can reduce poverty and its severity (harshness) • With no access to Islamic Financial Services, many of the poor in MENA will continue to be trapped in poverty with little to no chance of escaping it in the foreseeable future. Mufti Aziz Ur Rehman 12
  12. 12. Islamic Legal System The Islamic legal system has guidelines and regulations pertaining to the financial transactions of Muslim believers.  The prohibition of pre-defined interest-bearing loans.  Loss-Sharing Profit-Sharing of the business activities.  Islamic microfinance instruments, such as;  Musharakah  Murabaha could be particularly attractive tools for reaching and providing vital credit to the region’s poor, who represent about 17% of the total population of the MENA countries. Mufti Aziz Ur Rehman 13
  13. 13. Final Word As repeatedly mentioned in such gathering: ‘If you give a man a fish you feed him for one day’ But ‘if you teach him how to fish you feed him for a life time’. We have to fix the meaning of KYC >>> Kidnap Your Customer KYC >>> Kick Your Customer Mufti Aziz Ur Rehman 14
  14. 14. 192 Ahmad Block, New Garden Town, Lahore - Pakistan. Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056 Email: info@alhudacibe.com www.alhudacibe.com
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