Nadeem, Azhar (2010): Islamic Business Contracts and Microfinance-A Case of Mudaraba.
Download (720kB) | Preview
Mudaraba is designed to meet the need of poor Muslim microentrepreneurs for financial services that comply with their religious belief of interest prohibition. It is a partnership where one partner provides capital to the other for investing in a commercial enterprise. The profit-sharing ratio is agreed by the parties at the beginning of the contract, which can be terminated by either party after giving due notice.
The article explains the assumptions and terms and conditions of the Mudaraba model, and lists challenges involved. Any bank engaging in Mudaraba transactions should meet the following legal obligations:
•Contract details should be clearly documented; •Microfinance program should bear the entire financial risk without demanding collateral; •Profit-sharing ratios as a percentage of profit should be agreed upon before execution of contract; •Microentrepreneur has full control over business management, while supervision is the right of the microfinance program.
|Item Type:||MPRA Paper|
|Original Title:||Islamic Business Contracts and Microfinance-A Case of Mudaraba|
|English Title:||Islamic Business Contracts and Microfinance-A Case of Mudaraba|
|Keywords:||Microfinance, Islamci Microfinance, Non profit, Mudaraba|
|Subjects:||D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Household Saving; Personal Finance|
|Depositing User:||Azhar Nadeem|
|Date Deposited:||04. Dec 2010 01:24|
|Last Modified:||30. Dec 2015 19:57|
1. Karim, N., M. Tarazi and X. Reille (2008) “Islamic Microfinance: An Emerging Market Niche.” Focus Note 49. Washington D.C: CGAP, August
2. SBP Guidelines for Islamic Microfinance Business for Financial Institutions. State Bank of Pakistan Islamic Banking Department. http://www.sbp.org.pk/ibd/2007/Annex-c5.pdf
3. Gloud Blake: Islamic Microfinance Institute of Halal Investing http://investhalal.org
4. Al-ZamZami, Grace, L., “Islamic Banking Principles Applied to Microfinance. Case Study:Hodeidah Microfinance Programme, Yemen”, UNCDF, http://www.uncdf.org/english/microfinance/reports/thematic_papers/islamic_banking/main_text.html
5. Akhter Waheed( 2009): Islamic Microfinance and poverty Alleviation : A CASE OF PAKISTAN Proceedings 2nd CBRC, Lahore, Pakistan November 14, 2009
6. Obaidullah, Mohammed, Khan Tariqullah (2008): Islamic Microfinance development Challenges and initiatives IRTI Policy dialogue paper No.2 Jeddah
7. Obaidullah, Mohammed (2008) Role of Microfinance in Poverty Alleviation IRTI Jeddah
8. Chiara Segrado (2005) Islamic microfinance and socially responsible Investments: A case study
9. Dhumale R., Sapcanin A. “ An Application of Islamic Banking Principles to Microfinace” Technical Note, A study by the Regional Bureau for Arab States, UNDP, in cooperation with the MENA Region, World Bank
10. Ferro N. (2005) “Value Trough Diversity: Microfinance and Islamic Finance and Global Banking” Fondazione Enrico Mattei, Milan, Italy, June 2005
11. Range M. (2004) “Islamic Microfinance”, RWTH Aachen University, Research Center of “International technical and economical Cooperation” Faculty of Business administration, a thesis under directions of Prof. Dr. W. Gocht, 2004.
12. Usmani, M. Taqi. An Introduction to Islamic Finance. Karachi, Pakistan: Idaratul Ma'arif Karachi, 1998.
13. Khan, Ajaz Ahmed and Phillips Isabel (2010): Influence of Faith on Islamic Microfinance programs Islamic relief worldwide www.islamic-relief.com
14. Rehman, Aamir (2008). “Towards Islamic Microfinance: A Primer.” http://www.microfinancegateway.org/content/article/detail/41129
15. Hasanuzzaman, S.M. 1994. “What Is Mudaraba?” Journal of Islamic Banking and Finance