This chapter seeks to study the issues and challenges faced by Islamic microfinance institutions in … Although Islamic finance was originally re-introduced to fight poverty, this objective fell down on the industry's agenda. While conventional microfinance has taken the lead, it is providing non-Sharia'ah compliant offerings that millions of low-income Muslims reject. Together with a colleague, Professor Malcolm Harper, I have just spent the past few months researching and editing a book on Islamic microfinance – which is defined as Shari’ah compliant financial services for poor people. The “Islamic Microfinance Challenge” was one of the major revelations to kick off the plan. Microfinance conventionally provides services to underprivileged entrepreneurs and works toward poverty alleviation but what’s good to know is whether the Islamic microfinance institutions are really making a change. Then Islamic microfinance products have been examinated and make possible now the creation of new products in line with the existing ones. Islamic law emphasizes moral and ethical values in all dealings, prohibiting the payment or receipt of interest (riba). #Mudarbha_and_Musharka #Murabha #Islamic_Trade #Islamic_Sale_and_Purchase. Informative & Scope Services and challenges of Islamic microfinance by Samar Al-Montser. However, this does not mean that capital is free of charge, that it should be made available without any … Microfinance is a banking service that is provided to unemployed and low-income individuals who have no other means of gaining financial services. PRESENTED BY – A free PowerPoint PPT presentation (displayed as a Flash slide show) on PowerShow.com - id: 3edba1-NTg5N 16 Asyraf Wajdi Dusuki, … Dr Ajaz Ahmed Khan Senior Microfinance Advisor, CARE International. Trade Based Modes of Islamic Microfinance ( Murabahah, Salam, Istisna etc.) In accordance with Islamic law, any element of usury must be avoided entirely in economic transactions, hence resulting in the imposition of management fees on the borrowers instead of interest. By Tasnim Nazeer Islamic microfinance is becoming an increasingly popular mechanism for alleviating poverty, especially in developing countries around the world. Islamic microfinance (IMF) is becoming the most popular source for poverty alleviation in the world, especially in the developing countries. #Difference_Between_Conventional Micro-finance_&_Islamic_Microfinance #Islamic_Microfinance_kia_hay? The nexus between Islamic banking and microfinance has been previously discussed, addressing interest free lending while promoting fairness and ethical practices in accordance with Islamic law. Islamic microfinance represents the ultimate opportunity for Islamic finance to live up to its potential. of global microfinance despite a global Muslim population of about 1.2 billion. Islamic Aid has been working on Islamic microfinance for more than 10 years helping poor people to increase their incomes and make their futures more secure, without compromising their religious beliefs. According to the 2008 Consultative Group to Assist the Poor (CGAP) survey, Islamic microfinance accounts for about 0.5 per cent. Al Amal, Winner of the Islamic Microfinance Challenge 2010 Al Amal provides various financial services and products (Islamic financing, savings, solidarity insurance, etc.) Can Islamic microfinance as it grows maintain its original spirit of fairness, transparency and sharing, principles that seem to have been almost forgotten in the world of conventional microfinance? Islamic finance, whether “micro” or not, is organising its financial services to comply with Islamic law. ‘the extent to which it alleviates poverty levels of its existing and potential customers’ [58] ; p. 173). This microfinance fund based on wakalah model will be managed by a separate company that will be paid management fees and it will not participate in the fund.19 Leveraging on Wilson’s wakalah model, Abdul Rahman suggested that this model could be used by Islamic banks for implementation of microfinance activities.20 9.3 What is Islamic Microfinance all about? Islamic Aid’s programmes work hard to ensure that poor people have access to the financial tools and training they need to help lift themselves out of poverty. More recently, from 28-30 of June, 2011, sixty-one participants from 25 countries participated in an online “Discussion Corner” organized by USAID on the subject of Islamic Banking and Microfinance Islamic microfinance attempts to capture the spirit of Sharia law by allowing financial tools that create and maintain a just economic system -- one that protects clients through built-in mechanisms like risk sharing. Islamic finance, “emerged in the early 1960s to provide alternative financial contracts that confirmed to Sharia principles of Islam” such as interest free loans. and is among a handful of microfinance institutions in the Arab World providing Islamic financial services. To the best of our knowledge, there were no previous studies that compared Islamic and conventional MFIs in this manner. Islamic Microfinance is a sector with a great potential to expand. Islamic microfinance, having a unique feature compare to the con-ventional counterpart, offers a potential solution to poverty al-leviation. Thus, Islamic microfinance concept had been developed as alternative for Muslim borrowers; based on Islamic financial contracts . An important area for the Islamic finance industry, therefore, is the adaptation of Islamic financial products to join in the development of microfinance to bring the initial objective of poverty alleviation back into the industry's focus. Islamic Micro Finance as effective tool of poverty alleviation. Islamic microfinance programmes cannot therefore imitate conventional microfinance programmes and are obliged to provide finance without charging interest. Islamic microfinance has also been growing remarkably, but only a few studies analysed the role of Islamic micro-financing in the socio-economic development in one country. 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