Financial inclusion of the poor: from microcredit to Islamic microfinancial services

Abstract

Purpose – The purpose of this paper is to initiate a direct discourse towards an Islamic microfinance focus agenda for the economic enlistment of the poor minority community and to allow poorer households in the financial inclusion. The issue of the Indian conventional microfinance institutions in failing to attract the poorest of the poor amongst Muslims is important for the purpose of this paper. This study explores a Shari’ah-compliant microfinance system which will create a level of playing-field with respect to the financial inclusion of the poor. Design/methodology/approach – The paper is a theoretical discussion on Islamic microfinancial services for financial inclusion of the poor. Therefore, there is little to say about “methodology” other than the conventional microfinance model is reviewed, and an alternative model of Islamic microfinancial service has been suggested to allow poorer households in the financial inclusion. Findings – The paper finds that there are some opportunities capable of improving the economic condition of the poor Muslim communities through some innovative approaches. To illustrate this finding, the paper emphasises on designing and delivering Islamic microfinancial products suitable for the poor based on the principle of Islamic solidarity. It argues that this service will help the poor and turn their savings into sums large enough to satisfy a wide range of personal, social and asset-building needs as well as needs relating to small businesses and consumption. Research limitations/implications – The paper’s findings are limited to the matter of financial inclusion of the poor through Islamic microfinancial services in India. Originality/value – Combining the Islamic social principle of solidarity for the less fortunate with the power of microfinance to provide financial access to the poor has the potential to reach out to millions more people. The ideas presented in this paper are designed to direct discourse towards an Islamic microfinance focus agenda for the economic enlistment of the poor Muslims in India.

Enhancing socio-economic justice and financial inclusion in Nigeria

“…An ideal society in Islam is where rules that relate to fair and just earning of income, such as the prohibition of interest, limiting profit earnings in favour of equitable distribution, holding workers in very high esteem and opposing the exploitation of labour are found (Mirakhor and iqbal, 2014). The study conducted by Hassan (2015) and Atia (2010) showed that Islamic financial instruments can play significant roles in enhancing financial inclusion. Naceur, Barajas and Massara (2015) argued that institutionalization of Islamic redistributive mechanisms such as Zakat, Sadaqah, Qardhul Hassan might assist in enhancing financial inclusion.…”

Can Islamic Microfinance Alleviates Poverty in Indonesia? An Investigation From the Perspective of the Microfinance Institutions

“…Likewise, according to Wulandari and Kassim (2016), IMFIs provides financial services not only for the poor but also for the poorest in the informal sector of the economy, which are usually being funded using external sources such as Zakat, Infaq and Shadaqah. Furthermore, another study finds that there are some opportunities capable of improving the economic conditions of the poor Muslim communities through IMFIs, based on the Islamic principle (Hassan et al, 2015).…”

Optimalisasi Laku Pandai Berbasis Masjid Guna Literasi Dan Inklusi Keuangan Syariah Berkelanjutan

“…Abul Hasan (Hasan, 2015) dalam penelitiannya menyatakan bahwa pembiayaan mikro syariah sebetulnya bisa menyasar kepada kelompok yang selama ini tidak terakses oleh lembaga keuangan konvensional. Adanya akses terhadap pembiayaan mikro syariah bisa menghindarkan kemiskinan bagi para keluarga yang miskin.…”