HYBRID MODEL OF ZAKAH, WAQF, QARD-HASSAN & ISLAMIC FINANCE FOR A JUST AND SUSTAINABLE MICROFINANCE (original) (raw)
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Development of Islamic microfinance: a sustainable poverty reduction approach
Journal of Economic and Administrative Sciences, 2019
Purpose-Though microfinance has been working for many years as a tool to eradicate poverty from its root, most of the least developed and developing countries are yet to significantly alleviate it from the society. The purpose of this paper is to focus on Shariah-based microfinance products in the context of sustainable poverty alleviation approach and provide them financial benefits to enhance their livelihoods. Design/methodology/approach-Here, this qualitative study critically analyzes the basics of the sustainable Islamic microfinance to exterminate the level of poverty. Findings-Islamic microfinance is a more ethical practice than the traditional motives of profit maximization, and it encourages extending the time of repayment if the debtors are in hardship. In some case, it suggests to give charity if the creditor has capability. Research limitations/implications-Most importantly, research scholars and experts have already criticized the concept of conventional microfinance on the basis of various points, especially for its high rate of interest. Social implications-Islamic microfinance is provided with a view to fulfill two tools simultaneously, i.e., social and financial inclusion. In this case, credits and Zakah can be given to the extreme poor people for satisfying basic needs. In terms of social responsibility, Islam encourages the people to be soft in case of collecting the lending money. Originality/value-The study discoursed that sustainable Islamic Microfinance (IM) may be a promising future option to draw the attention of the religiously sensitive people toward the Shariah-based microfinance which can, in turn, mitigate the poverty level.
ISLAMIC MICROFINANCE: HOW WILL IT HELPINDIA IN POVERTY REDUCTION
Poverty in world is still a major issue even in this day and age. The population of people living below the poverty line in world is astonishing and the problem is not going away. Poverty is general scarcity or the state of one who lacks a certain amount of material possessions or money. It is a multifaceted concept, which includes social, economic, and political elements. Poverty alleviation remains the most important challenge before policy makers in the world that is characterized by high and rising poverty levels. The purpose of this paper is to demonstrate the potential of Islamic Microfinance as an alternative tool for poverty alleviation. While poverty is a common problem faced by all countries, the efforts and actions has not reached the purpose yet. Still, it calls more attention from majority of government and development oriented organization to alleviate it in an effective and comprehensive approach. We focus on basic tenants of the Islamic ethical system and treat the Islamic ethos as an ideal, through which socioeconomic policies dealing with poverty elimination are assessed. Islam views society as a unified equity in which individual freedom and human dignity is supreme although subject to the axiom of responsibility. In Islamic perspective, poverty is not just viewed from material aspect but also moral/spiritual, thus, any poverty alleviation strategy should reflect on both aspects. It might be argued that while conventional approach on poverty left the importance of committing to moral/spiritual, Islamic approach has more attention on that aspect. Islamic microfinance, having a unique feature compare to the conventional counterpart, offers apotential solution to poverty alleviation.
Poverty Reduction through Islamic Modes of Finance; the Way Forward
The Journal of Social Sciences Research, 2018
The purpose of this paper is to share the conceptual overview of the role that Islamic modes of finance can play in the reduction of poverty. The underpinning principles of Islamic finance modes is the adherence of Islamic values and to promote economic and social justice in the society. This study is aimed at providing insights on the prevailing poverty reduction strategies and their respective impact on poverty eradicate alongside proposing an alternative Islamic model of poverty reduction. For this purpose, the present study overviews the existing literature and textual analysis of the subject to emphasize the significance of poverty as an issue around the globe along with the critical review of the strategies currently considered to eradicate poverty. Poverty has now been emerged as a global phenomenon, which is common across many nations and, perhaps, not surprisingly, a tough challenge to governments and community development-oriented organizations which have been striving to eradicate. The present paper is, therefore, an effort to propose a possible alternative approach for poverty reduction. Subsequently, some discussion has been made on the application of Islamic approaches of welfare and poverty reduction. Islam, as a religion, encourages healthy competition, private ownership, and allows demand and supply rule of working independently. Islamic approach to poverty reduction has multiple facets and it is aimed at reducing the gap between haves and have not"s through optimum circulation of wealth in the economy and by restricting capital to generate capital and allowing other factors of production along with the risk of loss to play their due role. Keeping in view the prevailing models of poverty reduction and critical evaluation of these models, the study has proposed Islamic modes of finance as a workable plan to reduce poverty and spread social justice in the society.
ISLAMIC MICRO-FINANCE AND POVERTY ALLEVIATION: A CASE OF PAKISTAN
INTERNATIONAL JOURNAL OF RESEARCH IN COMPUTER APPLICATION & MANAGEMENT, 2011
This research paper recognizes Islamic micro-finance as an important component in poverty alleviation strategies. While conventional microfinance products have been successful in Muslim majority countries, these products do not fulfill the needs of all Muslim clients. While taking an overview of Islamic microfinance in Muslim countries, this research paper undertakes a case study of Akhuwat, an Islamic microfinance organization operating in Pakistan. Critical financial analysis of Akhuwat indicates that it is providing its services for all living below the poverty line including the “extreme poor” and Interest free loans can be used as a powerful tool against poverty. It recommends that integrating Islamic microfinance with NGOs, NPOs (non-profit organizations), Zakah, Awqaf and with Takaful as well as with professional training and capacity building institutions will enhance the financial statbility of Islamic microfinance institutions and will be helpful to achieving their aim of providing micro financial services to the poorest of the poor under one roof.
Proceedings 2 nd ISLAMIC MICRO-FINANCE AND POVERTY ALLEVIATION: A CASE OF PAKISTAN
This research paper recognizes Islamic micro-finance as an important component in poverty alleviation strategies. While conventional microfinance products have been successful in Muslim majority countries, these products do not fulfill the needs of all Muslim clients. While taking an overview of Islamic microfinance in Muslim countries, this research paper undertakes a case study of Akhuwat, an Islamic microfinance organization operating in Pakistan. Critical financial analysis of Akhuwat indicates that it is providing its services for all living below the poverty line including the "extreme poor" and Interest free loans can be used as a powerful tool against poverty. It recommends that integrating Islamic microfinance with NGOs, NPOs (non-profit organizations), Zakah, Awqaf and with Takaful as well as with professional training and capacity building institutions will enhance the financial statbility of Islamic microfinance institutions and will be helpful to achieving the...
Ansari Journal of Ultra Scientist of Engineering and Management, 2019
Microfinance is constituted by a range of financial services for people who are traditionally considered non bankable, mainly because they lack the guarantees that can protect a financial institution against a loss risk. Islamic Microfinance is based on social justice and fair play. It involves prohibition of interest (Riba) on the lent money (loan). It works on profit and loss sharing and Qarz-e-Hasana. It aims at improving socio economic condition of the poor in contrast to earning profits by conventional microfinance institutions in the world. There are families who cannot afford to take loans from microfinance as they are so poor i.e. poorest of the poor who do not have enough to feed themselves two times a day, most of them are illiterate and lack the confidence to do any business activity. The paper studies an Islamic Microfinance institution named Anjuman Eanat-EBewagan & Yatama based in Bhopal India which started in 1916 by some Muslims who were well versed with the Islamic teaching and law. This institution gives zakat to poorer people who cannot even afford interest free microfinance.
The paper makes three issues. First, Muslim world ranks quite low in social development throughout the contemporary world despite potential availability of plenty of finance for social causes. The current institutional setup in Muslim world is not conducive to appropriately mobilize and channelize this potentially available social finance to its best use. A properly developed inclusive financial development is needed to is essential for raising the level of social development in Muslim world. Second, Islamic banks still have to establish their identity in the Muslim world as truly “Islamic” banks. There is general public view that Islamic banks are not truly Islamic banks. Getting into social finance on Islamic principles can change this image. This paper argues that there is good case for Islamic banks to go in to social finance to give it an identity distinct from conventional banks that can help them compete with conventional banks’ Islamic banking services. Third, the system of Awqaf is potentially a powerful institution for Social Development. The contemporary socio economic realities in the Muslim world require a planned effort to effectively use this institution for social development, in general, and for eradication of hunger, illiteracy and other elements of extreme poverty, in particular. And this suggests the role of state in integrating social finance with planned social development using system of Awqaf and the network of Islamic banks that will help synchronize social progress with economic progress. (Key words: Social Finance, Inclusive financial Development, Awqaf, poverty)