Muhammad Zubair Mughal
Chief Executive Officer
Alhuda centre of Islamic banking and economics
Islamic Microfinance
Product Development
& Country Experiences
Islamic Microfinance
Product Development
& Country Experiences
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Islamic Microfinance: Product Development & Country Experiences, Summaries of Product Development
An overview of Islamic microfinance, its basic principles, sources, current status, and future potential. It covers the product development process, the role of Shariah compliance, and the involvement of various parties. The document also highlights major markets for Islamic microfinance and their institutions in Pakistan, Afghanistan, Indonesia, and Yemen.
Typology: Summaries
2021/2022
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Muhammad Zubair Mughal
Chief Executive Officer Alhuda centre of Islamic banking and economics Islamic Microfinance Product Development & Country Experiences Islamic Microfinance Product Development & Country Experiences
Contents
Basic Principles of Islamic Banking and Finance
Source of Islamic Finance Product Products
Current Status and Future Potential of Islamic
Banking
Product Development of Islamic Microfinance
Process Flow
Islam and Shariah
Sources of Islamic Finance Islamic Banking Product Mechanism
- (^) Quran
- (^) Sunnah
- (^) Ijma’a (jurist consensus)
- (^) Ijtihad & Qiyas (analogy) Source of Islamic Banking
Islamic products and services offered by 2000+ Financial Institutions around the world . United States: 20 - Al Manzil Financial Services - American Finance House - Failaka Investments - HSBC - Ameen Housing Cooperative Germany: - Bank Sepah - Commerz Bank - Deutsche Bank Switzerland: 6 UK: 26 - HSBC Amanah Finance - Al Baraka International Ltd - Takafol UK Ltd - The Halal Mutual Investment Company - J Aron & Co Ltd (Goldman Sachs) Bahrain: 26 - Bahrain Islamic Bank - Al Baraka - ABC Islamic Bank - CitiIslamic Investment Bank Malaysia: 49 2 - Pure Islamic Banks (Bank Islam, Bank Muamalat) Rest - conventional banks Saudi Arabia: 37 - Al Rajhi - SAMBA - Saudi Hollandi - Riyadh Bank UAE: 58 - Dubai Islamic Bank - Abu Dhabi Islamic Bank - HSBC Amanah Qatar: 41 - Qatar Islamic Bank - Qatar International Islamic Kuwait: 9 - Kuwait Finance House Iran: 8 Egypt: 12 - Alwatany Bank of Egypt - Egyptian Saudi Finance Indonesia: 4 Sudan: 9 Pakistan: 76 India: 3 Bangladesh: Turkey: 7 - Faisal Finance Institution - Ihlas Finance House Yemen: 5
Current Status of Islamic Finance Industry
Total market size 2.3 Trillion USD with having
2000+ Islamic Financial Institutions
- (^) In 81 Countries, among them 42 are Islamic
and 39 are Non Islamic Countries.
250+ Takaful companies
750+ Islamic Funds are operating globally
- (^) 300+ Sukuk has been issued
300 Islamic Microfinance Institutions
( 1Billion USD)
Vanilla Products : Structure Existing Product Islamically Design New Products : Design New products Product Evolution : Change Product Feature with No Change in Structure Process Enhancement: Enhance the current process and procedures Accounting, Compliance & Technological Enhancement Type of Products
BOD CEO/MD Shariah Board/Advisor Product Development Department Marketing Department Accounting & Finance I.T Department HR & Capacity Building Sales Team Role & Internal Involvement for New Product
Phase 1: Product Summery by Product Development Dept. Phase 2: Product Concept Document(PCD), Presentation and approval Phase 3: Legal and Shariah Approval Phase 4: Market Research, Survey’s FGD, SWOT Analysis, External and Internal Environmental Screening etc. Phase 5: Designing of SOP’s, Accounting, Compliance & Technological Enhancement, different forms, HR & Credit Policy Evaluation process, Compliance Mechanism etc. Phase 6: Regulatory Approval (if any), Pilot Testing Phase 7: Trainings, Marketing, sales team development Phase 8: Product Launch ( Sort Launch or Hard Launch ) Phases Involved
(^) Products Manuals (^) Contracts (^) Forms (^) Fatwas (^) Fees and Charges (^) Training Materials (^) Protected Soft Copy and Access right (^) Custodian (^) References/versions Product Documentation
Pakistan & Islamic Microfinance IndustryPakistan & 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
Afghanistan & Islamic Microfinance IndustryAfghanistan & Islamic Microfinance Industry
- (^) Innovation:
- (^) Enterprise Incubation i.e. business modeling and micro financing.
- (^) Integration of Rural Economy (Exact Target Market) with Islamic Microfinance
- (^) Challenges:
- (^) Lack of Quality HR in Islamic Microfinance Sector Poor IT integration
- (^) Weak microfinance regulatory regime.
- (^) Unavailability of Micro Insurance
- (^) Security, Law and order
- (^) Future Prospects:
- (^) Rising Donors’ interest for poverty alleviation (FINCA, HIH, MISFA & USAID etc)
- (^) High demand of Islamic Microfinance
Yemen & Islamic Microfinance IndustryYemen & Islamic Microfinance Industry
- (^) Innovation:
- (^) I.T Integration & Micro Takaful
- (^) Role of Islamic Bank to Strengthened the Islamic Microfinance Institutions.
- (^) Challenges:
- (^) Reluctance in Research & Implementation of new Products, as only (Murabahah) is serving almost 80% of Islamic Microfinance Industry.
- (^) Significant division of Urban and Rural population
- (^) Law and Order
- (^) Future Prospects:
- (^) High Demand of IMF
- (^) Role of SFD & YMN
- (^) New Range of Islamic Microfinance products
JazzakAllah
Thank you for listening
with patience
Muhammad Zubair Mughal Chief Executive Officer AlHuda Centre of Islamic Banking and Economics [email protected] www.alhudacibe.com