Islamic Microfinance - A missing component of Islamic Bankin
From HodHood
Contents
Top 20 FREQUENT WORDS
islamic 141 financial 83 australia 81 finance 72 microfinance 69 mcca 38 financing 37 banking 33 services 33 australian 32 investment 32 community 29 iskan 27 ijara 26 murabaha 25 muslim 24 institution 22 based 21 goods 19 purchase 19
DOCUMENT KEY POINTS
- introduction the objective of this study is to examine the viability of islamic financial institutions hereinafter referred to ifis vis a vis their microfinance facilities in the interestbased economy of australia which contradicts the ideals of islamic financial system
- the study concludes that imsps in australia can proliferate in microfinance if they gradually advance towards undertaking more creative microfinance techniques to suit the financial needs of their clientele to facilitate their desired contribution in microfinance
- it is a comprehensive way of life religious and secular it is a set of beliefs and a way of worship it is a vast and integrated system of laws it is a culture and civilisation it is an economic system and commercial norm it is a polity and method of governance it is a society and a family conduct it is a spiritual and human totality thus worldly and other worldly
- it is derived from two primary sources the qur an the transcription of god s message to the prophet mohammad pbuh and the sunnah the word and living tradition of the prophet mohammad pbuh in addition to two dependent sources namely ijma and qiyas which are meant to provide interpretation and thereby facilitate future development and implementation of the islamic judicial system
- as a shari ah term it refers to the premium that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or for an extension in its maturity which today is commonly referred to as interest
- however the a modern era of islamic finance began in the s with the foundation of the pioneering a social bank in the egyptian village of mit gha mister it follows the establishment of the inter governmental islamic development bank isdb in jeddah in and a number of commercial islamic banks such as the dubai islamic bank the kuwait finance house and the bahrain islamic bank in the s and s
- rural development banks suffered massive erosion of their capital base due to subsidized lending rates and poor repayment discipline and the funds did not always reach the poor often ending up concentrated in the hands of better off farmers
- one more example mfis and ngos non governmental organisations in india mostly rely on savings collection to support their institution and become sustainable while in egypt they are forbidden by law to collect savings
- a few studies have been carried out on the subject and experience on the field is still relatively small but it proves to have huge potentialities both to fight against poverty financial and social exclusion and to enlarge and enrich the basin of clients of financial institutions in developing countries with an islamic cultural substratum
- as its ultimate goal is the maximization of social benefits as opposed to profit maximization through the creation of healthier financial institutions that can provide effective financial services also as grass roots levels some authors al harran argue that islamic finance if inserted in a new paradigm could be a viable alternative to the socio a economic crisis lived by the western paradigm
- the borrower often pays for the goods in equal instalments and the microfinance program owns the goods until the last instalment is paid
- although traditional banking products have been available in yemen for many years and are still the predominant type of finance many people especially the poor have been reluctant to take credit in part due to religious beliefs
- range in his study underlines how the prohibition of riba in islamic finance does not constitute an obstacle in building sound microfinance products on the contrary the side effects of an islamic foundation could probably enhance it
- in addition a report published in the australian on october disclosed that national australia bank nab will look at introducing islamic financing into its product range to capture an untapped market that could be worth millions of dollars
- the two synonyms a customers and a customers have been used interchangeably and referred to the same persons entities throughout this study although there seems to be a slight technical difference between the two as a customers are transaction based and thus they are transient and mercurial associations while the a customers are relationship based and as such are long term associations
- based in two major cities of australia melbourne and sydney mcca serves the diverse needs of all consumers and was recently honoured with the australian business award for small and medium enterprises smes in the categories of enterprise and community contribution for community service and community reinvestment
- as a corporate that is majority owned by australian muslims the enterprise category acknowledges business that have shown the initiative and willingness to undertake bold new ventures while community contribution recognises those who demonstrate examples of policies or projects that positively impact on the community and generate outcomes that have a long time benefit
- in keeping with the islamic principle that the financier and the buyer should share the risk and reward of the venture mcca takes an equity stake in the property and buyer pays monthly rent with a capital repayment component a eventually to assume full ownership
- mudaraba is used for joint partnership investment in mcca while the musharaka product is used for equity investment in mcca and crescent ethical mda services
- islamic co operative finance australia limited islamic co operative finance australia limited icfa was officially endorsed and registered by the registry of co operatives department of fair trading the government of the state of new south wales in may under the co operatives act nsw sections and to function as co operative within the state of new south wales
- to meet eligibility criteria of an active membership provision a child under the age of years pays at least of the joining fee of a plus of shares each share is valued at a and agrees to pay the remaining portion by equal installments during the first financial year
- under this scheme a customer wishing to perform hajj deposits money by installments to this fund over a specified period to be able to bear hajj related expenses when the fund is matured
- iskan finance pty limited iskan finance as stated on its official website is an australian business established in by a group of australian and non australian muslims with the core objective to pioneer create and promote the most competitive shari ah compliant home facilitation programme possible for the islamic community in australia
- as regards the membership requirements any person residing in the state of new south wales may be eligible to become a general member of icfa by paying a oneoff membership fee of a and an active member of icfa by purchasing a minimum of shares valued at a each
- the a ijara facility does not require the customer to enter into any partnership with iskan and the customer enjoys the full benefit of any capital gain in the property
- techniques used by the islamic microfinance services providers in australia an evaluation the imsps in australia although have seemingly been functioning in line with the central objective of islamic finance to provide facilities and services to their clientele their practice need to be thoroughly investigated
- a a price that is agreed mutually and not under compulsion b between parties that are sane and have the legal capacity to understand the implications of their actions c at the time of contracting the subject matter of the contract be in existence and able to be delivered without uncertainty or deception d the contract must not be based upon a consideration that is itself prohibited under the shari ah e
- in a typical musharaka between a bank and a customer ie partner at the time of distribution of profits the customer pays the bank its share in the profits and also a pre determined portion of his own profits which then reduces the bank s shareholding in the investment
- with a view to the limited access to their data and information and adequate information are not available in their official web sites and publications all relevant data and information of these ifis could not be obtained to the researcher
- qard hasan financing or interest free loan qard hasan is a benevolent type of loan provided by some of financial institutions in australia free of any charge usually to the needy on humanitarian grounds if their resources allow providing such loans without unduly affecting their profitability for investors and shareholders
- side by side with the conventional banking facilities they offer for the prospective customers since other leading global banking institutes such as hsbc amanah citibank standard chattered bank deutsche bank and ubs of switzerland have already entered the markets to offer islamic financing facilities in a significant manner through their trans national banking subsidiaries
- kitab al fiqh a ala al madhahib al arba ah beirut dar al kutub al a ilmiyyah
- journal of islamic economics banking and finance references al jaziri a abdal rahman
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DOCUMENT WORD ANALYSIS
Main Category
- AlHuda Material\islamic micro
KeyWords
islam finance bankable contract client profit purchase financial asset microfin risk sale transact price murabahah busi sharia goodasset payment invest
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DOCUMENT REFERENCES
Number of Pages
22
Published Date
2009-02-19 06:07:43
