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RIBA (Interest) [ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَواْ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَواْ ] (That is because.

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Presentation on theme: "RIBA (Interest) [ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَواْ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَواْ ] (That is because."— Presentation transcript:

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2 RIBA (Interest) [ ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَواْ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَواْ ] (That is because they say: "Trading is only like Riba,'' whereas Allah has permitted trading and forbidden Riba) (Surah Al-Baqarah :275)

3 Islamic Mode of Financing V/S Conventional Mode Islamic Financial InstitutionsConventional Financial Institutions Deal with goods as well as documentsDeal with documents only Supply/Receipt of Goods against moneyMoney/Documents are traded against Money/Document

4 Islamic Finance for the Poor Micro Entrepreneur Islamic MF Poorest of the Poor Qard – e – Hasna Destitute - Zakat

5 COMMON MODES OF ISLAMIC FINANCING PARTNERSHIP BASED MusharkaMudarba TRADE BASED MurabahaMusawamahSalamIstisna RENTAL BASED Ijara Diminishing Musharka

6 CENTRE FOR WOMEN COOPERATIVE DEVELOPMENT

7 VISION POVERTY ALLEVIATION THROUGH ENTERPRISE DEVELOPMENT

8 MISSION To support the Potential Poor in Pakistan break out of Poverty cycle by providing them with Necessary Borrower Islamic Finance, Business Development Services and Advocating their Rights.

9 BOARD OF DIRECTORS Mr. Ejaz Ahsan CHAIRMAN Mr. Mushtaq PirzadaVice Chairman Mrs. Samina IslamGeneral Secretary Mr. Abbas KhanFinance Secretary Mrs. Naseera Bokhari Joint Secretary Dr. Shireen Zaffarullah Member Dr. Waseem BanoMember Mr. Jawaid TariqMember Mr. Raza ToorMember Mrs. Khalil RamdeyMember Dr. Tayyaba Nasreen Member Eng. Arif Toor Member Mr. Razi-u-Din Member Mr. Abdul RasheedMember (C) Mr. M. Asghar Member(C) Mrs. Afshan JabeenMember (C) Mrs. Shafqat SaleemMember (C) *Mrs. Farida Tariq, CHIEF EXECUTIVE OFFICER EXECUTIVE COMMITTEE Dr. Shireen Zaffarullah Dr. Waseem Bano Mrs. Samina Islam Mr. Abbas Khan Mrs. Farida Tariq AUDIT COMMITTEE Dr. Waseem Bano Mr. Raza Toor, ACA Mr. Abbas Khan, FCA

10 SUSTAINABLE BORROWER SUSTAINABLE ORGANISATION A BALANCED APPROACH TOWARDS ISLAMIC MICRO FINANCE

11 THREE INGREDIENTS TO ENTERPRISE DEVELOPMENT SUSTAINABLE BORROWER SUSTAINABLE ORGANISATION RIGHT ADVOCACY BUSINESS DEVELOPMENT SERVICES ISLAMIC MICROFINANCE

12 Organization Background Started up in 1992 with Health & Education Projects Working in Microfinance with an Islamic Approach Since 1999 Consultation with Scholars in Masjid e Ibrahim Lahore in 2002 Product/Asset based approach since day ONE Consultation with Mufti Iftikhar Baig in 2006 Development of Islamic Model, 2008

13 1999 & 2000 Rs. 658,000 1 Branch office 1 District 2001 & 2002 Rs. 1,753,500 1 Branch Office 1 District` 2003 & 2004 Rs.12,583,000 2 Branch Offices 1 District 2005 & 2006 Rs.122,844,000 8 Branch Offices 1 District 2007 & 2008 Rs.212,220, Branch Offices 3 Districts 2009 Till Date Rs. 398,561, Branch Offices 5 Districts Rs. 19,941,000 (Islamic 8 Branches) Vision 2010 Rs.1,000,000, Branch Offices Punjab Districts Being Served : Lahore Sheikhupura Gujranwala Faisalabad Nankana Sb Opening of Islamic Branches Development of Islamic Manuals Enterprise Development Facility Review of Procedures by Shariah Consultant

14 Financial Highlights Total Assets342,036,181241,635,322187,131,312 Gross Loan Portfolio145,908,619116,087,060106,087,220 Disbursements105,916,028113,951,00098,269,000 Total No. of Clients Served 16,75013,74910,025 Operational Self Sufficiency 88.75%87.6%89.78% Total Expense/ Assets

15 Trade Based Mode Murabaha Salam Istisna Rental Based Mode Ijara (Not Currently in Practise) Diminishing Musharaka

16 MURABAHA Murabaha has been derived from the concept of Bai - Muajjal which isInstant Sale Instant Sale on Deferred Payment

17 Murabaha Transaction is always asset backed. Asset backing is not prerequisite for Interest bearing loans. It is fixed price contract. Price can not be increased in case of default. Interest is charged on daily basis from the Customer. It is purely sale and purchase transaction. It is lending of money and charging of interest. Relationship between Bank and Customer is Seller and Buyer. Relationship between Bank and Customer is Creditor and Debtor. Murabaha Vs Interest Bearing Loans LoansMurabaha

18 MURABAHA VENDOR Buys Product Pays Purchase Price Sells Product at Purchase Price Plus Profit Margin Pays on Deferred (Installments) Basis CUSTOMER

19 Salam Salam was permitted to facilitate the poor farmers and Traders who needed money to cultivate their crops or buy items in overseas/foreign lands in order to sell them afterwards.

20 Sal`m Advance Payment against Deferred sale DELIVER GOODS AFTER MANUFACTURING/FARMING PAYS PURCHASE PRICE OF GOODS BEFORE MANUFACTURING/FARMING THIRD PARTY / OPEN MARKET SELL GOODS AT PROFIT MANUFACTURER /FARMER

21 Istisna It is an order to the producer or manufacturer to produce/manufacture a specific commodity for the purchaser. Istisna is also a particular kind of sale which is executed before the Asset come in to existence.

22 DELIVER GOODS AFTER COMPLETION PAYS PARTIAL PURCHASE PRICE OF GOODS alongside Production (Progressively) THIRD PARTY / OPEN MARKET SELL GOODS AT PROFIT ISTISNA MANUFACTURER

23 Diminishing Musharaka Financier and his client participate either in the joint ownership of a property or an equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically, thus increasing his own share till all the units of the financier are purchased by him so as to make him the sole owner of the property, or the commercial enterprise, as the case may be. The client pays rent for the portion of asset used by the client, owned by the financer incase of joint ownership of property or equipment

24 Diminishing Musharaka VENDOR Joint Purchase of Asset Client Purchases CWCD Ownership & pays Rental on Remaining CWCD Ownership CUSTOMER Asset Purchased is Insured through Takaful

25 School Construction/Rennovation Up to Rs. 300,000 (Murabaha/Istisna) Upper Cap – Rs. 300,000 per case Rate is negotiated with the client Done under Islamic Mode of Microfinance – Murabaha – Istisna(Pipeline) Project has been completed within 2 months, and demand is coming from other enterprises for similar facility

26 Financial Highlights For Islamic Microfinance Apr 2009 – Oct 2009 Total No. of Clients till Date391 Average Facility Size51,000 Total Amount of Facility Procured19,941,000 Total Number of Branches8

27 Challenges Faced in Islamic Microfinance Sector Sources of FUND – The funds available are not in Islamic Mode and hence the Organization can never become completely Islamic Increase in Cost of Transaction Understandability of Islamic Finance Availability of trained Human Resource

28 CWCD ISLAMIC MICROFINANCE TRAINING WING Training Opportunities on Procedures of Islamic Microfinance, by the experienced Trainers of CWCD Low cost training for the actual working in Shariah Complaint Microfinance Interactive Sessions with Shariah Advisor

29 Future Plans Expansion of Islamic Microfinance within Punjab Pre testing and Implementation of Musharaka & Mudaraba Research & Development of new Islamic Microfinance Products

30 Thank You for Your Attention


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