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Showing posts from May 8, 2011

Islam Poverty and Microfinance

Microfinance has been talk of the town since last decade or so. Islamic microfinance is recently entered in market and since then been in experiment mode with varied degrees of success. Islamic Microfinance is based on concept of prohibition of interest and profit and loss sharing. Interest based microfinance has been a success in societies with largely Muslim populations. Our scope of work is to analyze grounds for Islamic Microfinance specially
Why Islamic Microfinance is needed?
What will be the Instruments used by Islamic Microfinance Program?
What can be challenges and opportunities for Islamic Microfinance?
Current section will focus on how Islam sees poverty? What measures are provided in Islam to combat poverty? What is common denominator in Islam, Islamic Finance and Microfinance.
Islam is not only a religion but a complete way of life that was revealed to humanity by our creator who is most knowledgeable, wise and just. Islam was revealed as a practica…

Using Islamic microfinance to alleviate poverty

Poverty alleviation has traditionally been the domain of the interest-based development agency and profit generation has always been the mainstay of the corporation. Rarely have the two overlapped: corporate shareholders have no interest in giving money away and development banks have little to offer profit-oriented investors. Until microfinance. For perhaps the first time in economic development history the poor are seen as potentially profitable.
Microfinance is a financing tool that sustainably provides very small loans to the working poor. A handful of borrowers, usually 5 to 20 individuals, assemble themselves into groups. The first set of loans are extended to an initial subset of individuals within the group, for instance 2 out of the group’s 5 individuals, and once these loans are repaid, a second subset of individuals receive their loans. This continues through the entire group, circulating until a final loan is extended to a designate…

Islamic banks grow as recession impact muted

Islamic banking is gaining popularity in emerging markets after helping some financial institutions avoid the worst of the economic meltdown.
In its simplest form, Islamic banking requires that financial products — from mortgages to savings accounts — be structured to comply with sharia law under the Quran. Sharia law restricts rates and encourages clear terms, which means that under an Islamic home financing, banks can’t charge interest, but may buy the property outright and lease it back to the consumer for a set amount each month.
From 2007 through 2009, Islamic banks’ assets grew an average of twice as fast as conventional banks’ assets in major Muslim markets, research released in September by Maher Hasan and Jemma Dridi of the International Monetary Fund show. While Islamic banks weren’t necessarily more profitable than traditional institutions during this time, they were able to extend credit to customers at a faster rate.
Islamic banks’ growth, along with their ten…

Global Recession and promises of Islamic Finance

THE world economy is in the grip of a financial crisis. The crisis originated in the United States (US) with plunging house prices, stock price declines, and a severe credit crunch (falling credit availability), and then spread across Europe and major Asian countries. This financial crisis is far more serious than any experienced over the last four decades. International Monetary Fund (IMF) considers this financial crisis as more serious than the great depression of the 1930s. In spite of billions of dollars of bailout and liquidity injections by a number of developed countries, the crisis is showing no signs of abating. There is hence a call for a new architecture that would help minimise the frequency and severity of such crises in the future. But before we call a new architecture to redesign the financial market let us try to determine the primary cause of the financial crises.

Causes of present global crisis: It is very difficult to find out the causes of this financ…

Global Recession shifts interest on Islamic Finance

With irresponsible banking practices taking the blame for bringing about the global economic crisis, there has been a surge of interest in Islamic finance. Islamic finance is estimated to be worth $700 billion and has been growing by 15 to 20 percent per year.Now, a slew of academic courses are springing up to meet the demand of those wanting to break into an expanding market. According to ratings agency Moody's, the global Islamic finance sector is worth $700 billion and has the potential to be worth $4 trillion. What's more, the ethical principles underpinning Islamic finance are seen by some as offering a more sustainable alternative to profit-oriented conventional banking. The result is that academic institutions are lining up to offer formal training in the area. "There is a huge demand for Islamic finance courses now, so large that it's difficult to cope with," Professor Habib Ahmed, Sharjah chair in the school of government and international affairs at Durha…