The Case for Islamic Microfinance under Shariah - PowerPoint Presentation

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The Case for Islamic Microfinance under ShariahPresented at Global Islamic Microfinance Forum in Dubai Presented on 08 December, 2012By Mufti Aziz Ur RehmanManager Shariah, Mawarid Finance, Dubai

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Outline

Poverty and IslamIslam and FaqeirTreatment of Incapable of Earning in IslamTreatment of Financially Distressed in IslamTreatment of Capable of Earning in IslamRecommendationsFinal Word

Mufti Aziz Ur Rehman

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Poverty and Islam

Poverty in Islam:-Qura’an & SunnahFinancial Classification of SocietyRich (Ghani) and Poor (Faqeir) >>> Why??Where can Poverty lead the poor to?And do not kill your children out of povertyAnd do not kill your children for fear of poverty.Concept of wealth in Islam / Qura’anGhani Shakir and Faqeir SabirAshara Mubashshara >>>> 6/10

Mufti Aziz Ur Rehman

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Islam and Faqeir

Islam treats Faqeir according to his need and extent of poverty Faqeir is subjected to. Faqeir may be individual or a family.Three types of Faqeir;Incapable of Earning(عاجز) Financially Distressed (كارثة مالية)Capable of Earning(قويـًا مكتسبًا)

Mufti Aziz Ur Rehman

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Treatment of Incapable of Earning in Islam

Incapable of Earning (عاجز)Compensated / remitted from Zakat fundIf not sufficient; from Sadaqat and thenSupport from Baitul Mal (Islamic treasury) A Social Security System of IslamOmar Bin Abdul Aziz and the victorious commander Khalid Bin Waleid. Hairah

Mufti Aziz Ur Rehman

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Treatment of Financially Distressed in Islam

Financially Distressed (كارثة مالية)Support and provision of funds to meet one’s needs enabling the distress to be eased.Freeing captives or slaves, those in debt and to pay Diyyat money etc.Imam Abu Yousuf RA said; يدفع للعاجز عن زراعة أرضه الخراجية لفقره كفايته من بيت المال قرضا ليعمل و سيتغل أرضه (ابن عابدين)

Mufti Aziz Ur Rehman

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Other Solutions for Incapable of earning and Financially Distressed

Kaffarat >>>> Yamin, Dhehar, IftarFidya Sadaqat FitrNozoor HadyeUdhiya AqeeqaKhums Fay’a Kharaj and Jizyah Darayeb and Others

Mufti Aziz Ur Rehman

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Treatment of Capable of Earning in Islam

The real focus of Islamic microfinance;Capable of Earning(قويـًا مكتسبًا) The Holy Qura’an says; فإِذَا قُضِيَتِ الصَّلَاةُ فَانتَشِرُوا فِي الْأَرْضِ وَابْتَغُوا مِن فَضْلِ اللَّـهِ And when the prayer has been concluded, disperse within the land and seek from the bounty of Allah,اللَّـهُ الَّذِي سَخَّرَ لَكُمُ الْبَحْرَ لِتَجْرِيَ الْفُلْكُ فِيهِ بِأَمْرِهِ وَلِتَبْتَغُوا مِن فَضْلِهِ It is Allah who subjected to you the sea so that ships may sail upon it by His command and that you may seek of His bounty;.

Mufti Aziz Ur Rehman

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Treatment of Capable of Earning in Islam

Prophet Mohammad SAW says;كَمَا يَرْزُقُ الطَّيْرَ تَغْدُو خِمَاصًا وَتَرُوحُ بِطَانًا In this Hadith Prophet SAW mentioned two words; اي سعيا و حركة Striving and Movement ما أكل أحد طعاماً قط خيراً من أن يأكُل من عمل يديه the best food is what gained from hand crafts.

Mufti Aziz Ur Rehman

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Why not Support ‘Capable of Earning’ from Zakat / Sadaqaat?

على أن تأجرني ثماني حجج on [the condition] that you serve me for eight years; Why ? Because he was قوي أمين Prophet SAW encouraged work / crafts. He said; الكاسب حبيب الله and said اليد العليا خير من اليد السفلى “a giving hand is better than a taking one”Prophet SAW said, لا تحل الصدقة لغني و لا لذي مِرّةٍ سوِيٍّ اي القوي سليم الأعضاء “Do not solve the charity to rich one and strong intact”

Mufti Aziz Ur Rehman

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Recommendations

Are begging, being dependant on charity and / or being under debts supported and encouraged: NOWe MUST avoid the following;Making poor habitual of beggingProfiting at the expense of poor being exploitedTackling of poverty by Qard Hasan/Murabaha alone (a limited use is fine)Tackling of poverty through charitable act alone

Mufti Aziz Ur Rehman

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Recommendations

Qura’an said; اِلا أن تكون تجارة عن تراض منكم; Andفامشوا في مناكبها و كلوا من رزقه Andأي الكسب افضل؟ قال عمل الرجل بيده و كل بيع مبرور. و قال فيعمل بيده فينفع نفسه و يتصدق. Donations/ Qard Hasan / Charities are not permanent, Trading is medium and long term.Combine Ebadat and Trade (Reward + Profit)In Waqf, best os to adopt to Ijarah modelSalam, Istisna’a, Musharaka, Mudaraba etc.

Mufti Aziz Ur Rehman

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Final Word

As repeatedly mentioned in such gathering:‘If you give a man a fish you feed him for one day’ But ‘if you teach him how to fish you feed him for a life time’.A short story:Fix the meaning of KYC >>> Know your customerKYC >>> Kill your customer

Mufti Aziz Ur Rehman

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