slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Muhammad Zubair Mughal Chief Executive Officer Alhuda centre of Islamic banking and economics www.alhudacibe.com PowerPoint Presentation
Download Presentation
Muhammad Zubair Mughal Chief Executive Officer Alhuda centre of Islamic banking and economics www.alhudacibe.com

Loading in 2 Seconds...

play fullscreen
1 / 25

Muhammad Zubair Mughal Chief Executive Officer Alhuda centre of Islamic banking and economics www.alhudacibe.com - PowerPoint PPT Presentation


  • 167 Views
  • Uploaded on

Muhammad Zubair Mughal Chief Executive Officer Alhuda centre of Islamic banking and economics www.alhudacibe.com. Experiences in Regulating and Supervising Islamic Microfinance Institutions - Pakistan as Case Study At Regulatory and Supervisory Framework in Islamic Microfinance

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Muhammad Zubair Mughal Chief Executive Officer Alhuda centre of Islamic banking and economics www.alhudacibe.com' - jui


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide2

Muhammad Zubair Mughal

Chief Executive Officer

Alhuda centre of Islamic banking and economics

www.alhudacibe.com

Experiences in Regulating and Supervising

Islamic Microfinance Institutions -

Pakistan as Case Study

At

Regulatory and Supervisory Framework in

Islamic Microfinance

18th – 19th March, 14 - Khartoum – Sudan

slide3

Contents

  • Basic Principles of Shariah Based Microfinance.
  • Source and Mechanism of Islamic MF Products
  • Type of Islamic Microfinance Institutions in Pakistan
  • Legal and Regulatory Structure of Islamic MFIs
  • State Bank of Pakistan Guidelines for Islamic Microfinance.
  • Shariah Compliance for Islamic Microfinance
  • Licensing , Reporting and Operating Criteria.
slide4

Basic Principleof Shariah Based Microfinance

  • Prohibition of Interest
  • Care for the poor is a religious obligation in Islam
  • Asset Based Financing
  • Risk Sharing
  • Sanctity of contracts
  • Financing in Halal/Shariah Compliant Activities.
  • Micro Takaful ( Islamic Micro Insurance)
    • Beneficial for both Muslim and non-Muslim

“Assisting the poor is a pillar of Islam”

slide5

Overview of Islamic Microfinance Mechanism

Source of Islamic Microfinance

Islamic finance is the outcome of religion in banking

  • Quran
  • Sunnah
  • Ijma’a (jurist consensus)
  • Ijtihad & Qiyas (analogy)
  • Islamic Microfinance Products Mechanism
  • Sources of Islamic Microfinance
slide6

A Misconception removed

Islamic Microfinance is a system not the Religion, it can be utilized & operated by both Muslims and

Non-Muslim Communities for Poverty Alleviation, Social & Economic Development.

Micro Takaful

Free from Interest

Financing

Free from Gharar

Shariah Compliant Funds

Shariah Vetted Products

Trainings & Quality HR

Shariah Compliant Investments

Factors to be considered while doing IMF

and more….

Poverty Alleviation Element

Moral

Ethical

Social

Islamic

Micro

Finance

Ensure Shariah Compliance

slide8

Global - Islamic Microfinance Industry

  • 300+ Islamic Microfinance Institutions operating in 32 Countries
  • USD 1 billion Market Size.
  • Indonesia, Bangladesh, Pakistan and Afghanistan have 80% share of Global Islamic Microfinance industry (CGAP)
  • 2 Million Active financing Clients.
  • Murabahah & Qarz-e-Hasan are the Major Products.
  • Share of Islamic Microfinance in Islamic Finance industry & Microfinance Industry is less than 1%
slide9

Compatibility IMF Products with MF Models

  • Grameen Model: Amna Iftikhar – Malaysia, Islami Bank Bangladesh Limited etc.
  • Village Bank Model: Sanadiq program -Jabal al-Hoss, Syria, FINCA - Afghanistan etc.
  • Credit Union Model: Muslim Credit Union (Tobago), The Amwal Credit Union etc.
  • Cooperative Model: AlBaraka MPCS – Mauritius, Al- Khair Coop. – India, Muslim Community Coop.– Australia, Karakorum Cooperative Bank – Pakistan.
  • Self-Help Group:AameenSociety – India
  • For Profit Banks/MFIs : Ghana Islamic Microfinance Banks – Ghana, HSBC Amanah – U.K, Bank Islami - Pakistan
  • `
slide10

IMF’s Product for all Level of Poverty

and more….

Salam, Istisna and other products

Non-Poor

Transitory Non-Poor

Qarz-e-Hasan, Murabahah, Ijarah, Mudarabah

Transitory Vulnerable

Transitory Poor

Chronic Poor

Zakat, Sadqa, Ushar

Extremely Poor

slide11

Legal & Regulatory Framework

  • The legal and regulatory framework of
  • Islamic micro-finance

Pakistan as Case Study

slide12

Pakistan

  • Population - 180 million
  • Muslim population - 97%
  • GDP – USD 225.1 billion
  • Per Capita Income – USD 1260
  • Category – Lower Middle Income
  • Poverty Rate – 22.3% (less than USD 1.25/ per day)
  • Microfinance Industry – Developing
  • Lack of Funding (Least interest of Donors) in Islamic microfinance while demand of Islamic Microfinance is rising

Source: World Bank (website)

slide13

Pakistan - Islamic Microfinance Industry

  • 14+ Islamic Microfinance Institutions operating in Pakistan
  • 350 + Branches of IMFI’s
  • 500,000+ Active financing Clients.
  • Murabahah & Qarz-e-Hasan are the Major Products.
  • Micro Takaful, Micro Saving, Branchless Banking etc.
slide15

Pakistan & Islamic Microfinance Industry

  • Innovation:
    • Micro Takaful
    • IT Integration (Mobile Banking) in Islamic Microfinance
    • Livestock Product with Islamic Microfinance operation
    • Micro energy & Micro Saving products
  • Challenges:
    • Unavailability of Shariah Compliant fund
    • Reluctance of Donor Agencies for Islamic Microfinance
    • Accounting & I.T systems., Rating Agencies.
    • Law and order in Northern part of Pakistan
  • Future Prospects:
    • Rapid growth of IMFIs with high acceptability from the Muslim community.
    • Govt. Interest and IDB Support
    • AlHuda Centre of Excellence in Islamic Microfinance
slide16

Type of Islamic Microfinance Institutions in Pakistan

  • MFIs, IMFIs, NGO’s, Rural Support Program: Registered and Supervised by SECP under Companies’ Ordinance 1984 (Section 42)
  • Trust, Foundations, Waqf, Cooperatives etc: under joint companies ordinance 1861
  • Microfinance Bank: Regulated by State Bank of Pakistan
  • Islamic Banks/Banks with having IMF operation: Regulated by SBP
slide17

State Bank of Pakistan Guidelines for Islamic Microfinance Business by Financial Institutions

  • Option 1
      • Establishment of Full-fledged Islamic Microfinance Bank (IMFBs)
    • Option 2
      • Islamic Microfinance services by Full fledged Islamic banks
    • Option 3
      • Islamic Microfinance services by conventional banks
    • Option 4
      • Islamic Microfinance services by conventional microfinance banks (MFBs)
option 1
Option 1
  • Licensing
  • Nation wide Microfinance Banks;
  • Province wide Microfinance Banks;
  • Region wise Microfinance Banks;
  • District wide Microfinance Bank
      • Application Compliance with Legal framework and Prudential regulations
      • Bank draft of PKR 500,000 by applicant
      • Appointment of Shariah Advisor by applicant according to fit and proper criteria of SBP.
      • Shariah vetted Products along with product structure and its beneficial use.
      • Ensure the Expertise, Shariah Compliance Mechanism, Quality HR, Policies, Manual, Procedure etc.

Establishment of Full-fledged Islamic Microfinance Bank (IMFBs)

option 2
Option 2

Islamic Microfinance services by full-fledged Islamic Banks

  • Mode 1 - Islamic Microfinance counters at existing branches
  • Mode 2 - Stand alone Islamic Microfinance branches and mobile banking
  • Mode 3 - Independent IMFBs as subsidiary of MFBs
  • Mode 4 - Developing linkages with IMFBs and IMFIs
option 3
Option 3

Islamic Microfinance services by Conventional Banks

  • Mode 1 - Microfinance counters at existing branches
  • Mode 2 - Stand alone Islamic Microfinance branches and mobile banking
  • Mode 3 - Establishing Independent Islamic MFBs as Subsidiaries of conventional Banks
  • Mode 4 - Developing linkages with IMFBs and IMFIs
option 4
Option 4

Islamic Microfinance services by Conventional Microfinance Banks

  • Eligibility Criteria:
    • Shariah Advisors Particulars (SAP) according to the fit and proper criteria of SBP
    • Shariah Compliant Deposit and Financing Products.
    • Infrastructure and Logistic requirements
    • Required changes in Memorandum and Articles of Association allowing the acceptance of deposits on PLS basis
    • Segregation of Funds (Islamic and conventional)
    • Set up Separate Islamic Microfinance division (IMD)
establishment of islamic microfinance division imfd
Establishment of Islamic Microfinance Division (IMFD)
  • Policies
  • Procedures/ Practices
  • Shariah Compliance
  • Capital Adequacy
  • Cash Reserves and Statutory Liquidity Requirement (SLR)
  • Financing need, source and utilization
  • Products mechanism
  • SOPs/ Manuals
  • Risk management
  • Compliance with SBP directives,
  • Role and responsibilities
  • Human Resource Training periodically
compliance to be ensured by imfi in
Compliance to be ensured by IMFI in:
  • System and Control
  • Internal Audit
  • Accounting Records
  • Utilization of Conventional Branch Network
shariah compliance
Shariah Compliance
  • Shariah Supervisory Board at Central Bank /SECP
  • Internal Shariah Advisor
  • Shariah Audit/Shariah Review
  • Shariah supervision of Islamic Microfinance Network
slide25

AlHuda Center of Islamic Banking and Economics

160 B, Ahmad Block, New Garden Town, Lahore - Pakistan.

Ph: (92-42) 35913096 - 98, Fax: (92-42) 35913056

Email: info@alhudacibe.com

www.alhudacibe.com