Islamic microfinance practices with a particular reference to financing

The performance of the Islamic entrepreneurship projects financed thought the banking system in Sudan and the obstacles and factors that influence the decision making of Small and Medium Enterprises (SMEs) are evaluated in this paper. Sudanese Islamic banks face the major dilemma of long-term financing of SMEs. For socio-economic development, especially in rural areas, it is important that banking facilities are fairly distributed. The use of group lending concept in financing musharakah to SMEs is recommended. This reduces the administrative work of the bank staff and also increases the security in the case of default. The share of the management in the profit should be fair and indicative of the role of the management in the generation of the profit. The banks should not be allowed to interfere with the management affairs of the SME nor should they be allowed to disclose information about the business without prior consent of the business.