Interest Free Micro Financing
Livelihood Program using Interest Free Islamic Micro Financing
Islamic Interest Free Micro Financing: Your one time donation allows for interest free loans for the poor, the unemployed and the widows. That family uses that money to start a small business or buy a sewing machine for example that will become a source of livelihood for them. This will allow self sufficiency and the loan will be repaid. The repaid loan then goes back into the pool of money that will be used to loan out money to others in need. The cycle continues and it becomes a form a sadaqa–e-jariya. The best form of charity.
Denotation levels: $500, $1000, $1,500, $2,000 & more
Please Donate Generously
[select 'Interest Free Micro Financing' option in the Preference field]
An Interview with Dr. Shabbir Hussain, Ph.D.
Managing Director of ICNA Relief Canada's Microfinance Program in Pakistan/Kashmir/Afghanistan
Dr. Shabbir had described the need of Islamic Micro Finance Program in Pakistan & Kashmir. He said:
"There are currently 27.7 million people in the micro-finance market. We need to expand, since only 1.87 million have been reached so far. Some of the interest based groups that give out micro-finances are charging high interest rates (30% or up) while we are doing it interest free.
We have three modes of lending finances: Qardh-e-Hasna, Murabah, and Musharakah.
- Qardh-e-Hasna – for marriage, building houses, etc... The same money we give is taken back after a certain period. Currently operating in Kashmir, Manshera, etc. with 200+ beneficiaries.
- Murabah Program – under which we provide loans for the micro enterprises started by women. Especially set for graduates through our Skills Development Program. We are providing [specific] machines for their business needs. No money is provided, only commodities. Instead of charging interest, we add a margin to the total price for the loan. For example, if they request a sewing machine that costs Rs. 5000, we sell the machine for 5500 and make a contract that it must be paid in 1 year.
- Mudarabah/Musharakah – 80/20 profit sharing ... risks sharing. The lender is doing business, we share in the profits: 80% for them and 20% for the lender. So we share in the risk of any profits and losses. If we, for example, provide them the cow and it dies, it is our loss, not theirs. We assess the borrowers before giving them the loans. This is decided by the Market Committee (group from the local community/village). They send us the proposal first, and then we assess and approve the loans.
In addition, please note that we don't have branch banks. That means, we don't have local offices in each town and village, since most of our clients are from rural areas, the Market Committees from each locality are empowered from each area to ensure that the micro financing program keeps working in a smooth manner. It is group based banking; the community/village ensures that each lender pays back the loan. This also creates a sense of ownership by the community itself.
We will also be starting Takaful Insurance, shortly, InshAllah.
Pakistan office is focusing its efforts only in Pakistan/Kashmir & Afghanistan. But ICNA Relief has its interest free Microfinance Programs in Sri Lanka & Bangladesh as well."
