Islamic Micro Finance

Islamic Micro Finance

Provision of Islamic microfinance services and products

Common Elements between Islamic finance and microfinance:

1. There are many similarities in the nature of Islamic banking and microfinance as both forms of finance represent unconventional solutions to financial needs starting from egalitarian approaches being open to all customers without setting any apparent restriction to different categories of clientele.

2. Similarly both the systems advocate financial inclusion, entrepreneurship and risk-sharing through partnership finance.

3. Moreover, both have their focus on developmental and social goals to be accomplished in the society.

Criteria for Islamic Microfinance:

The following criteria would be followed for persons/entities applying for Islamic Micro-finance bank:

i) All financial transactions of Islamic MFB will be in accordance with the injunctions of SHARIAH.

ii) Every Islamic MFB will be required to appoint a Shariah Advisor who should meet the “Fit and Proper Criteria” for Shariah Advisors, issued vide IBD Circular 3 of 2004. Appointment of Shariah Advisor will require written approval from State Bank of Pakistan for which information about Shariah Advisor should be submitted to the State Bank on Form SAP, provided in the aforementioned circular.

iii) The application shall indicate the modes of finance and product structure proposed to be used for raising resources and extending financial assistance to the clients.

iv) The applicant