Islamic Banking A Guide for small and mediam Sized Enterpris
From HodHood
Contents
Top 20 FREQUENT WORDS
mfis 52 costs 44 funds 36 islamic 36 financing 23 ibs 21 social 21 waqf 20 mfi 18 microfinancing 17 mses 16 based 15 collateral 15 sources 14 finance 13 institutions 13 assets 12 clients 12 deposits 12 risk 12
DOCUMENT KEY POINTS
- economics of microfinancing i profit revenue a costs i revenue rate of return on funds invested i costs finance costs operating costs i operating costs variable costs wages fixed costs rent utilities etc
- i variable costs field level costs costs at the head regional branch offices i microfinancing i revenue may be low due to credit risk i costs are high due to large operating costs
- financing mses i commercial financial intermediation not feasible i if the poor have to be financed there is a need for social financial intermediation i two ways to do so i linking approacha existing financial institutions can do it through specialized windows i specialized institutions approacha ngos non profit organizations etc
- i almost all of mfis models are of the second type
- mfis bank mfi a profit maximizing firm non profit government nongovernment organization financial intermediary between funds from external sources savers and investors in the provided to the poor economy deposits form bulk of the liability savings forced of clients only deposits do not have social educational includes social educational programs programs physical financial collateral social collateral through group and required to get funds center formation
- banks vs
- mfis bank mfi clients relatively well off clients are poor clients come to the bank bank goes to the clients amount of loan large amount of loan small most clients are men most clients are women repayment frequency small end repayment is frequent weekly of the contract period
- banks vs
- i it is difficult to go out with the clients and buy the goods assets from faraway markets imfis delegates someone else and inspects later i alternative is to use profit sharing modes i problem is the moral hazard problem no bookkeeping and difficult to monitor
- dilution in the application of islamic modes of financing i main modemurabahah or bai muajjal
- lack of funds i most mfis get their funds from external sources i islamic mfis have difficulty in getting funds from these sources i operations and expansion of activities affected i islamic mfis have not yet tapped the sources of funds from islamic institutions like zakah waqf and other charities
- training i training can enhance efficiency but is costly
- ibs economics of microfinance i profit revenue a costs i revenue rate of return on funds invested i costs finance costs operating costs i operating costs variable costs wages fixed costs rent utilities etc
- i variable costs field level costs costs at the head regional branch offices
- ibs operating costs i mfis i for any level of operations an mfi will maintain officesa higher fixed costs i higher variable costs wages at head regional branch offices i ibs i no extra costs needed to maintain offices for the microfinancing program can use bank s premises a lower fixed costs i lower variable costs wages at head regional branch offices i conclusion operation costs to finance mses is lower in case of ibs compared to mfis
- mfis vs
- ibs finance costs i mfis sources of funds i main source a external funds mfi has pay a rate of return though subsidized in many cases i no depositsa forced savings of membersa competitive returns are paid on savings i ibs sources of funds i deposits i demand deposits no costs i investment deposits has to pay competitive returns to depositors i conclusion given the excess liquidity in ibs the funds from demand deposits can be used for msesa finance costs of ibs can be lower than that in mfis
- mfis vs
- ibs quality of service i dependence on external funds in mfis comes with conditionalitiesa ibs more flexible i lack of funds in mfisa poorer quality work force especially at field level a can increase the default rate i ibs pay competitive wagesa good quality workers with higher productivity i employees of ibs can be trained by the bank at low costa not possible in case of mfis i most ibs have funds collected from penalties for late paymentsa these funds can be used for complementary asset building poverty reducing programsa asset building in form of grants or qardhassan
- mfis vs
- ib and microfinancing an example i islami bank bangladesh ltd ibbl has a rural development program rds to finance mses i started in and funded from ibbls general investment fund i as of october rds operated from branches of total covering villages giving a total of tk
- i employees involved with rds have better benefit packages than other mfis i employees get in house training at ibbl training academy
- i paid back in weekly installments i no physical collateral required i group based lending i rate of return charged is percent with
- rebate for timely payment other mfis rate range from to
- mfi based on awqaf and zakat i returns from waqf given for investment purposes and zakat funds for consumption purposes use the same operational format as mfis as it suits the mses
- qard hassan banka nonprofit financial intermediary i capital would be cash waqf i will receive current accounts i provide qard hassan interest free loans for microfinancing
- w mfi sources and uses of funds i sources of funds i obtain funds from waqf and other sources waqf certificates qard hasan deposits etc
- i use of funds mode of financing i qard loan at service charges i sale based and hiring modes murabahah salam ijarah i profit sharing modes musharakah and mudarabah
- w mfi typical balance sheet assets liabilities cash c savings deposits ds assets a qard hasan deposits dq fixed income assets f waqf certificates s microfinancing m takaful reserves t qard investments murabahah profit equalizing reserves ijarah salam istisna p mudarabah reserves econ cap
- v musharakah capital waqf w
- of beneficiaries use waqf returns only use of the endowment
- example waqf of million rate of return financing per beneficiary grameen bank
- i financing should adopt operational mechanisms of mfis as they suit these clients i financing mses by ibs is most efficient cost effective a given the social responsibility and excess liquidity in ibs financing mses should be undertaken i traditional institutions of waqf zakat and qard hassan are important means of financing mses during contemporary timesa should be integrated with microfinancing
- conclusion i there are strong economic reasons for establishing islamic alternatives to poverty focused microfinancing
Please note, This is an auto generated summary based on sentances position in the document and other factors
DOCUMENT WORD ANALYSIS
Main Category
- AlHuda Material\islamic micro
KeyWords
islam finance bankable contract client profit purchase financial asset microfin risk sale transact price murabahah busi sharia goodasset payment invest
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DOCUMENT REFERENCES
Number of Pages
49
Published Date
2016-09-17 00:47:38
