Qard-Al-Hassan as a Tool for Poverty Alleviation a Case of Fael Khair Waqf Program in Bangladesh

Abstract

Islamic economic system centrally focuses on socioeconomic justice and overall welfare of the society especially the bottom of the pyramid segment. Qard-al-Hassan, alongside zakat and sadaqah, is one of the instruments of redistribution of income and wealth from the rich to the poor in Islam. In 2007, Bangladesh struck by super cyclone SIDR, leaving 3,406 people dead. Moreover, the SIDR caused unprecedented damage to homes, crops and livelihoods. Fael Khair Waqf (FKW) Program came as a response to the urgent need for assisting the victims of SIDR which initiated an interest-free micro-loan (Qard-al-Hassan) scheme to restore the livelihoods of a large segment of victims and to uplift them from poverty. While investigating the effectiveness of Qard-al-Hassan in poverty reduction, this paper has examined FKW program as a case. This study conducted an analysis on 1600 households using independent sample t-test and logistic regression to investigate to what extent FKW program has been effective in reducing poverty. The finding of the logistic analysis is that the probability of being poor for FKW participants is around 1.46 times lower than the non-participants. Moreover, Qard-al-Hassan of FKW lowers the cost of borrowing significantly and hence the participants can accumulate more assets which might help them to improve their economic status after the cyclone. Overall, the effectiveness of this program implies that the development practitioners and researchers should promote the outreach of Qard-al-Hassan so that extreme poor can easily avail the services.

A systematic literature review on the socio-economic roles of waqf: evidence from organization of the Islamic cooperation (OIC) countries

“…Some topics based on this theme include increasing the role of waqf in reducing the level of poverty in society, analyzing the opportunities for integrating waqf with zakat, infaq, sadaqah and other sources of ummat funds (Amuda and Embi, 2013;Haneef et al, 2013Haneef et al, , 2015Kresnowati and Berakon, 2017;Mohd. Hanefah et al, 2011;Muneer and Khan, 2019;Shirazi, 2014b), cash waqf collection (Ahmad, 2015b;Kresnowati and Berakon, 2017;Mohammad Abdullah, 2020;Oladapo et al, 2017;Shahimi et al, 2013) and creating new job opportunities that support waqf to alleviate poverty (Diniyya, 2019).…”

Practical Implication of Zakat in Socio-economic Empowerment during the COVID-19 Pandemic

“…Through the Center for Zakat Management (CZM), Bangladesh is responsible for increasing the potential and implications of zakat, so it is expected to have a massive impact on society, especially during the COVID-19 pandemic (Muneer & Khan, 2019). The zakat is helpful, particularly as a short-term emergency support system during the COVID-19 crisis.…”

The Higher Education Financing Based on Islamic Shariah: An Unconventional Approach of Student Loan

“…He said: 'Because the beggar asks when he has something, but the one who asks for loan does so only because he is in need". So, it is vivid that Muslims and Islamic institutions practicing quard al hassan values are very much recommended to provide loan aimed at helping others on the basis of wealth redistribution, basic needs, and socioeconomic justice (Ali, 1989;Muneer & Khan, 2019;Pramanik et al, 2015).…”

“…But the devoted Muslims around the world are facing substantial hardship regarding the current student loan systems as it is mostly interest (riba) based loans which is utterly impermissible in Islamic shariah. In this case, potential devoted Muslim students can take loans without interest from a Qard-al-Hassan-based Islamic financial institutions on the basis of their merit, skills and expertise to up skill, reskill, and upgrade the knowledge of the recipients (Muneer & Khan, 2019;Pramanik et al, 2015). Therefore, Islamic financial institutions can develop a qard al hassan based viable student loan system for poor and devoted Muslim students.…”