The optimisation of Qardhul Hasan management in Islamic banking: enhancing its role in empowering the community

Abstract

Purpose Qardhul Hasan (QH) is a type of Islamic contract that prioritises benevolent aspects between beneficiaries and the fund provider. The effective management and distribution of QH can contribute to overcoming economic problems in society. This study aims to explore the potential to enlarge the sources of QH funding and QH financing in Indonesian Islamic banks. The paper proposes a framework for QH management in Islamic banks by identifying the sources of QH funds as well as the management and potential allocations of QH funds. Design/methodology/approach This study uses a descriptive analysis method with a framework-based review to discuss the strategy of optimising the sources, financing and management of QH in Islamic banks. The implementation of QH in the Islamic banking industry is described based on the previous literature and current phenomena. Findings To positively impact economic development, Islamic banks can collaborate with parties that are more focused on charitable activities and have greater resources to channel and use QH funds. This study also formulates a framework of QH funds management that prioritises efforts to multiply benefits for both the fund provider and the beneficiaries. Research limitations/implications The descriptive method used in this paper comprises preliminary research to analyse the current phenomena and potential strategies that can be implemented. Future studies may use empirical data to strengthen the analysis. Practical implications The recommendations of this paper can be used by relevant social fund management institutions in collaboration with Islamic banking. Social implications QH reflects not only the social aspects of Islamic banks and extends beyond their corporate social responsibility activities, its effective management will make a greater contribution to reducing the level of unemployment, poverty alleviation and supporting the country’s economic development. Originality/value This paper provides a framework that integrates financial institutions in maximising QH fund management to encourage greater benefits for the community. Although previous studies have mentioned the important role of QH, relatively few have considered how Islamic banks maximise its management.

Pelatihan Manajemen Modal Qordhul Hasan Pendekatan Spiritual community pada Usaha Mikro Desa Rowosari, Kendal

“…Salah satu jenis modal yang sesuai untuk pembiayaan usaha mikro non bankable yang berbasis pada prinsip syariah adalah qordhul hasan. Qardhul hasan merupakan salah satu jenis akad syariah yang mengedepankan aspek kesalehan antara penerima manfaat dan pemberi dana (Nugraheni & Muhammad, 2023). Hal ini diperkuat oleh Machfudz & Kamila (2019) bahwa implementasi pembiayaan qardhul hasan sangat membantu pelaku usaha mikro untuk mengembangkan bisnisnya.…”

Determinant of Qard: Evidence from Indonesian Islamic Rural Banks

“…Shariah Banks, on the other hand, serves a more varied customer base and has a more significant national and occasionally worldwide reach. They provide a more comprehensive range of services, including business finance and larger-scale projects (Nugraheni & Muhammad, 2023;Sadr, 2014) Study on the distribution of funds has been carried out by many parties. The analyses based on tracing historical studies are classified into empirical, normative, and qard studies during Covid-19 pandemic.…”

Islamic banks' contribution to Indonesia districts' economic growth and poverty alleviation

“…According to Islamic Financial Services Board (IFSB) (2020), Islamic banking assets reached $1.9bn by 2019 and have spread across the region and worldwide. It has become mainstream within the global financial system, whose main goal is social empowerment impacting the real economy, poverty reduction, and income inequality reduction (Nugraheni and Muhammad, 2023;Tamanni and Haji Besar, 2019). The existence of Islamic banking is not only to carry out financial functions through the practice of collecting and distributing funds based on sharia principles, but also has a certain socio-religious mission that focuses on improving the welfare of society (Abdul-Majeed Alaro and Alalubosa, 2019;Gani and Bahari, 2021).…”