The present study, aims at highlighting the issues related to collateral as practiced by the five leading representative Muslim Microfinance Institutions of Northern India, which is a densely
The author cites the exorbitantly high prices of conventional microfinance’s interest rate as 22% at Grameen and as high as 50% elsewhere. The author then lays out Islamic microfinance’s alternative under the mudaraba contract.
The article explores methods for combining Muhammad Yunus’ ingenious concept of Grameen Bank with the Islamic principle of non-interest. Instead, money could be garnered through a “profit/loss regime†in which the borrower’s share increases as he pays off the loan until he is in full possession of the financial asset. This new idea would include Yunus’ original portfolio scheme of assessing his borrowers along with the feature of zero tangible collateral.
There is much that Islamic finance can do to change the world in a manner profitable to its shareholders. Islamic law requires some sort of re-distribution of wealth and opportunity. This is most evident in contracts such as mudaraba and
The paper posits a micro-enterprise modeled on Islamic Law. The case study is specifically for Bangladesh, with the intent that the reader will be able to see the solutions as answers to current microfinance problems globally. Various organizational features of this micro-enterprise model are explained in detail, with an emphasis on the human resource component. The author develops the various features of a grassroots development program, focusing on its financial, organizational, and socio-economic elements.
The Islamic Finance Project (IFP), under the auspices of the Islamic Legal Studies Program at Harvard Law School, seeks to foster cooperation between academic and applied knowledge experts in order to confront the most pressing issues that the Islamic finance industry faces today. To that end, IFP has held numerous conferences, workshops, and other events on a broad range of pertinent issues. The symposium entitled Financing the Poor: Towards an Islamic Microfinance brought together a diverse and international group of speakers from both the microfinance and Islamic finance sectors.
Islamic Microfinance Institutions have seen slow progress due to their lack of funds and dearth of trained employees. There is no doubt that the workings of these institutions must be modified to pave the way for economic success among the poor. According to this article, there is evidence that Islamic banks can provide microfinance services more efficiently and easily due to their broad scale of operations.