Islamic societies are characterized by high and rising levels of poverty and financial exclusion. Financial exclusion is aggravated by failure on the part of conventional microfinance programs in giving due importance to the religious sensitivities of Muslims. For poverty alleviation efforts to succeed in these societies, there is need for an appropriate model that is rooted in Islam and conforms to beliefs, cultures of the Muslim clients.
This course aims to provide the participants with a comprehensive understanding of the building blocks of a microfinance program targeted at Islamic societies. It asserts that there are no fundamental contradictions in the objectives of global microfinance programs and of the glorious Islamic Shariah, though the methodology of latter may have certain distinct characteristics. The course seeks to present the Islamic approach as a composite and compassionate one that is rooted in charity, but permits wealth creation and for-profit enterprise. Spanning over five units, it focuses on the mechanisms, models, tools and instruments of the Islamic approach as prescribed by the glorious Shariah.
The course covers the following major areas in five modules:
1. Microfinance and Objectives (Maqasid) of Shariah: This module presents comprehensive human development in general and poverty alleviation in particular as the key global policy objective. This is discussed both in the context of the objectives (Maqasid) of the Shariah and that of the UN-mandated sustainable development goals (SDGs). The module presents the Islamic approach to poverty alleviations, carefully comparing the same with a diverse range of models of conventional microfinance that have historically been tried in various parts of the globe. By posing some serious challenges to the conventional models of intervention, the stage is set for solutions within the domain of Islamic economics and finance.
2. Modes and Models of Islamic Microfinance (For-Profit): This module undertakes a comprehensive review of available models of Islamic microfinance, which ithat use conventional methodology with Islamic products as well as the ones that are purely indigenous. It focuses on models that use Islamic sale-based modes, such as, murabaha and bai-bithaman-ajil or bai-muajjal, bai-salam, bai-istijrar, bai-istisna and lease-based modes, such as, ijara and ijara-muntahyya-bit-tamleek. It also covers the participatory modes, such as, mudarabah, musharakah and their variants.
3. Modes and Models of Islamic Microfinance (Altruistic & Not-for-Profit): This module undertakes a comprehensive review of models of Islamic microfinance, which use altruism-based modes (based on zakah, sadaqa and waqf); not-for-profit modes (qard al-hasan, kafala). It also covers the composite or blended models that includes both altruistic, not-for-profit as well as for-profit mechanisms,
4. Performance Evaluation & Regulation of Islamic MFIs: This module teaches how to identify the outcomes and impacts of Islamic microfinance project(s) and MFIs. It also familiarizes the student with the framework to monitor the financial, social, as well as Shariah performance of Islamic MFIs. It provides a comprehensive understanding of the regulatory concerns relating to IsMFI sector and an overview of IsMF regulations across the globe.
5. Case Studies in Islamic Microfinance: This module comprises several case studies that highlight some good practices in Islamic microfinance at the micro, meso and macro levels. The case studies highlight a wide range of Islamic microfinance possibilities in multiple regions, sectors as well as legal and regulatory environments.
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