Islamic Microfinance and Socially Responsible Investment

Top 20 FREQUENT WORDS

islamic 192 microfinance 106 percent 74 financial 56 products 48 sharia 48 finance 39 institutions 39 conventional 33 indonesia 33 banks 31 clients 30 countries 25 compliant 24 mfis 23 services 23 loan 22 cgap 21 development 20 funds 19 muslim 19 outreach 19

DOCUMENT KEY POINTS

in recent years some microfinance institutions mfis have islamic microfinance has the potential stepped in to service low income muslim clients who to expand access to finance to demand products consistent with islamic financial unprecedented levels throughout the principlesa leading to the emergence of islamic muslim world
this ban on that islamic microfinance has a total estimated global interest agreed upon by a majority of islamic scholars outreach of only customers and accounts for is derived from two fundamental sharia precepts only an estimated one half of one percent of total microfinance outreach

activities deemed inconsistent with sharia such as those relating to the since nearly islamic financial institutions consumption of alcohol or pork and those relating have been newly established or are being created to gambling and the development of weapons of the banker
industry s most prominent islamic finance scholars the size of the sukuk market in was estimated are in general agreement on the basic set of financial at us billion compared with us billion in precepts listed above

it is permissible for the financial which one party acts as financier by providing the institution to appoint the client as an agent funds while the other party provides the managerial on its behalf by means of a contract to directly expertise in executing the project
a there is only one type of permissible loan according to sharia the qard hassan or benevolent loan which is interest free and often considered a form of charity because it is typically forgiven in the event of default

despite its origins in the persian gulf sharia compliant new regulations in malaysia brunei and pakistan also banking has proved popular with muslims in other have supported the expansion of an islamic finance countries as well leading to the development of new industry alongside conventional financial services
thailand have regulated the competence and composition of ssbs as well as related rules governing over time islamic financial services also have appointment dismissal and qualifications of ssb expanded well beyond the muslim world and are members grais and pellegrini

although there is a market of poor clients who strictly engage in islamic transactions there is also a number of ifc commissioned market studies suggest a category of muslim clients who use conventional a strong demand for islamic microfinance products products but prefer islamic ones

the guidelines set forth requirements regarding licensing appointment anecdotal evidence however suggests that survey of sharia advisers to rule on sharia compliance and respondents may verbally express a preference for segregation of islamic product funds and related islamic products simply to demonstrate piety or documentation by banks and mfis that offer both when given a choice in practice will opt for a lower conventional and sharia compliant products

in addition female clients using islamic microfinance products the average outreach of the institutions covered percent is comparable to those using conventional the term islamic mfi in this focus note refers to any institution offering islamic microfinance services and not just to islamic institutions
in iran is informal though a number of originally outreach is very significant and as of march the charitable organizations have reportedly started central bank of iran estimated that million families microfinance operations

table includes the outreach data of only the islamic microfinance by institution type institutions that cgap was able to contact during its survey except with respect to those institutions in among the institutions that offer islamic microfinance indonesia about which information was obtained from products nongovernment organizations ngos are the indonesian central bank s statistics and in the dominant players in reaching the largest number the west bank and gaza about which information of clients with just institutions reaching percent
concentrating primarily on asset financing an institution targeting the poor and whose average the industry still lacks product diversification to serve loan size is less than percent of the country s the various financial needs of the poor

loan size total of clients portfolio islamic islamic of of of institution type institutions total us total us cooperative village bank syria ngo rural bank indonesia nbfi commercial bank total note this table reflects the data of only those institutions mixed and fully islamic that provided reliable outreach information to cgap during its global survey of islamic microfinance

in murabaha or ijara transactions the provider of building sustainable business models funds purchases a commodity such as equipment or inventory and resells or leases it to the user with islamic microfinance business models are still a markup
by as a result of percent a citibank manager percent the lack of management experience it was technically founding foundation yaysan wakalumi

critics at the micro and institutional levels international of islamic finance products suggest that the pricing donor agencies can play a major role in expanding of some products offered as sharia compliant too access to finance in muslim countries by helping closely parallels the pricing of conventional products
for example some suggest that pressure islamic financial standard setters such as ifsb or from the religious community and appeals to a aaoifi should consider developing global financial sense of religious duty should complement reliance reporting standards adapted to microfinance to on peer pressure

however a heavy reliance on charity is not necessarily the best model for the development throughout the muslim world microfinance islamic of a large and sustainable sector and more reliable or otherwise is still seen as a philanthropic activity commercially motivated streams of funding should rather than a business enterprise

making the transition from niche to frankfurt school of finance and management mainstream
islamic mutual funds as faith based funds in a socially responsible khan ajaz ahmed

the authors would like to thank jeannette thomas the sanabel microfinance network the islamic the following for their help in producing this focus note matthias development bank the islamic mfis and all other institutions range mohammed khaled samer badawi wafik grais meynar participating in the cgap survey
org C cgap the authors of this focus note are nimrah karim michael sihombing hans dieter seibel syed hashemi steve rasmussen tarazi senior policy specialist cgap and xavier reille lead deepak khana momina aijazuddin kate mckee ignacio mas microfinance specialist cgap

Please note, This is an auto generated summary based on sentances position in the document and other factors

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

DOCUMENT REFERENCES

Number of Pages

16

Published Date

2008-09-17 23:25:34

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Islamic Microfinance and Socially Responsible Investment

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Top 20 FREQUENT WORDS

DOCUMENT KEY POINTS

DOCUMENT WORD ANALYSIS

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KeyWords

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