Alternatives to interest : alternative to interest in micro-credit financing

Fatawa Question

First let me introduce myself Am MSc Economics from International Islamic University, Islamabad. I have been working with Islamic Relief (UK) All the mailing am doing is Unofficial, should not be quoted anywhere Am a part of Neelum valley integrated development program, and running the Sustainable Livelihoods component. My component aims at improving the economic status of the firing hit valley of Kashmir. Now we are planning to start a Micro-credit for that area our methodology is to form "Community Organizations" or COs comprising of 20-50 households. We do all the work with these COs. All COs collect their savings, and deposit in bank account, in the name of the org. IF we do "Mudarabah" with CO, for 50 % ratio (of profit or loss. Now our CO "Murabahah" say for Agricultural inputs. Question 1 What is status of the CO here ? Can we do a business with CO. Is the CO an entity, Islamically to deal with ? Question No 2 Which mode of financing is appropriate for us to deal ? We have to work in Agriculture, Micro Enterprise Development, livestock and small infrastructure Schems. I have taken a lot from your time. May Allah pay you much more. Rao

Fatwa

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Publication Date

2002-04-27

Main Subjects

Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Islamic jurisprudence
• Microfinance
• Bank loans
• Usury

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-726706

• APA
• MLA
• AMA