(MENAFNEditorial)
Dubai UAE: FAAIF CEO Camille Paldi announced that FAAIF will sponsor the Global Islamic Microfinance Forum GIMF 2014 in Dubai UAE on November 1- 2 2014. Paldi mentioned that there are approximately 250 Islamic microfinance institutions which are working in 32 countries around the world. There are 14 Islamic Microfinance Institutions in Pakistan 11 in Yemen 13 in Sudan 9 in Bangladesh 9 in Afghanistan 5 in the UK and 11 in Malaysia. Microfinance aims to provide poor households with permanent access to an appropriate range of high quality financial services including credit savings insurance and fund transfers with the ultimate objective of helping people obtain a better standard of living and a dignified presence on earth.
Shariáh based microfinance similar to Islamic finance is based upon principles such as the prohibition of riba and gharar asset-based financing risk- sharing sanctity of contracts and investment in halal and Shariáh compliant activities. Islamic microfinance products can be segregated into four categories: the partnership mode trade based mode rental based mode and other models such as Qard Hasan Waqf Zakah and Islamic cooperatives. Microfinance products include micro-credit micro-equity micro-savings micro-transfers and micro-insurance. Islamic banks may set up micro-takaful funds to provide to microfinance institutions on a charitable basis. In fact default payments given to Islamic banks for charity in murabahah transactions could be allocated to a micro-takaful fund set up for microfinance institutions on a charitable basis. This may provide insurance to recipients of microfinance in their enterprise and/or investment. In sum microfinance provides financial service to poor and low-income people whose low economic standing excludes them from the formal financial and banking system. Access to credit venture capital savings insurance and remittances are provided on a micro-scale which enables many people with limited means to participate in the financial system earn a living and participate in society. Microfinance models include the Grameen Bank Model Village Bank Model the Credit Union Model and Self Help Groups.
Microfinance works through the principle of joint liability providing short maturity graduating cycles of small loans repayments conforming to the business cash flow as well as promotes saving habits to cope with unforeseen adversity and maintains liquidity. These characteristics provide a strong nexus with Islamic finance. Social collateral an important invention of microfinance facilitates the provision of collateral free loans yet achieves high recovery rates (close to 100%). Islamic modes of sharing profit and loss also minimizes the need for collateral. Even the deferred payment in a sale transaction is more secure than in peer groups. Furthermore takaful (insurance) and kafalah (guarantee) reflect the collective responsibility and fulfill the requirements of group lending. FAAIF is excited to explore the concepts of microfinance at GIMF 2014 and encourages people of all faiths nationalities and backgrounds to attend in order to brainstorm microfinance ideas and learn about Islamic microfinance concepts. Details can be found on the event website at http://www.alhudacibe.com/gimf2014/.
FAAIF Limited is a legal and management consultancy firm servicing clients in Islamic banking finance and takaful. FAAIF Events is an events production and management company.
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