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Islamic micro financel for farz foundation


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AlHuda CIBE,

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Islamic micro financel for farz foundation

  1. 2. <ul><li>Zubair Mughal </li></ul><ul><ul><li>Chief Executive Officer </li></ul></ul><ul><ul><li>AlHuda : Centre of Islamic Banking & Economics </li></ul></ul><ul><ul><li>Editor in Chief. </li></ul></ul><ul><ul><li>Islamic Banking and Finance News , True Banking. </li></ul></ul><ul><ul><li>An Introduction to </li></ul></ul><ul><ul><li>Islamic Micro Finance </li></ul></ul><ul><li>Presented to </li></ul><ul><li>Farz Foundation </li></ul>
  2. 3. Outline of Presentation <ul><li>Introduction to Islamic Microfinance </li></ul><ul><li>Riba ( Interest ) </li></ul><ul><li>Difference between Islamic & Conventional Micro Finance </li></ul><ul><li>Product of Islamic Micro Finance. </li></ul><ul><li>Progress of Islamic Banking in Pakistan & Worldwide </li></ul>
  3. 4. Islam and Shariah Islam Aqidah (Faith & Belief) Shariah (Practices & Activities) Akhlaq (Morality & Ethics) IBADAT (Man to God Worship) Muamalat (Man to Man Activities) Political Activities Economic Activities Social Activities Banking & Financial Activities
  4. 5. Sources of Fiq’h in Islam (Islamic Finance) <ul><li>Quran </li></ul><ul><li>Sunnah </li></ul><ul><li>Ijtehad / Qiyas </li></ul><ul><li>Ijama’e Ummah </li></ul>
  5. 6. Basic Difference between Islamic and Conventional Microfinance <ul><li>Conventional </li></ul>MFI Client Money Money + Money(interest) IMFI Client Islamic Microfinance Goods & Services money
  6. 7. Riba in Quran <ul><li>“ ... God has permitted trade and forbidden interest... ” </li></ul><ul><li>(Sura Al-Baqara 2:275) </li></ul>
  7. 8. <ul><li>Murabahah </li></ul><ul><li>Ijarah </li></ul><ul><li>Salam & Istisna etc </li></ul><ul><li>Musharakah </li></ul><ul><li>Modarabahah </li></ul><ul><li>Other Products </li></ul>Human Financial Needs Fulfillment of Financial Needs Own Capital Others’ Capital Equity Financing Debt Financing
  8. 9. PRODUCT TREE Islamic Microfinance Modes Trade Based Modes Partnership Based Modes Rental Based Modes <ul><li>Musharaka </li></ul><ul><li>(Joint Venture Profit Sharing ) </li></ul><ul><li>Mudaraba </li></ul><ul><li>( Trustee Profit Sharing) </li></ul><ul><li>Murabaha </li></ul><ul><li>(Cost Plus Profit Sale) </li></ul><ul><li>Musawama </li></ul><ul><li>(Bargain sale ) </li></ul><ul><li>Salam </li></ul><ul><li>(Commodity Sale) </li></ul><ul><li>Istisna </li></ul><ul><li>(Sale on Order) </li></ul><ul><li>Ijarah </li></ul><ul><li>( Leasing ) </li></ul><ul><li>Diminishing </li></ul><ul><li>Musharaka </li></ul><ul><li>( Transfer of Ownership) </li></ul>
  9. 10. Industry Progress in Pakistan
  10. 11. Encourage asset-based financing and based on commodity trading & Services Based on money trading. Money is a medium of exchange and not a commodity Partners, investor and traders, buyer or seller relationship Creditor-Debtor relationship Aim at maximising profit but subject to Sharia'h restrictions Aim at maximising profit without any restrictions Promote risk-sharing between provider of capital (investor) and user of funds (entrepreneurs) assured of pre-determined rate of interest Functions and operations are based on Sharia’h principles Functions and operations are based on fully man made principles Islamic Micro Finance Conventional Micro Finance
  11. 12. Deal in Zakat ( Non Muslim Countries ) Do Deal in Zakat It gives due importance to the public interest, its ultimate aim is to ensure growth with equity Very often it results in the banks own interest becoming prominent. it makes no effort to ensure growth with equity Islamic banks have no provision to charge any extra money from the defaulters It can charge additional money in case of defaulters No right of profit if there is no risk involved. The profit and loss sharing depositor may lose money in case of loss. It is almost risk free banking and depositor has no risk of losing its money because interest is guaranteed. Islamic Micro Finance Conventional Micro Finance
  12. 13. ONUS SHIFTS!! <ul><li>Customer </li></ul><ul><li>to Halal Restaurant Owner </li></ul><ul><li>Halal Restaurant Owner </li></ul><ul><li>to Halal Meat Supplier </li></ul><ul><li>Halal Meat Supplier </li></ul><ul><li>to Halal Abattoir / Butcher </li></ul><ul><li>Customer to Islamic Banker </li></ul><ul><li>Islamic Banker </li></ul><ul><li>to Shariah Scholars </li></ul>
  13. 14. Thank You.