Islamic microfinance
Small-scale Islamic finance for low-income households and micro-enterprises, using qard hasan, sales, leases or partnerships.
Islamic microfinance provides small financings, savings and takaful to low-income households and micro-enterprises through Islamic contracts. Common tools include qard hasan for emergencies, murabaha and ijarah for stock and equipment, and small partnerships for working capital. Some programmes combine commercial finance with zakat or waqf funds to reach people who cannot bear any financing cost.
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Qard hasanA benevolent loan repaid at face value with no return for the lender, often used for social and hardship lending.MurabahaA sale at cost plus an agreed, disclosed profit; the seller must own the asset first. Payment is often deferred in instalments.Zakat recipients (asnaf)The categories of people and purposes to which zakat may be paid, as set out in the Quran.WaqfAn endowment: an asset is dedicated so that its principal is preserved and its benefits go to a stated purpose.