Nizam Ahmed

Representatives of banks, microfinance institutions and non-government organisations of 27 countries including Bangladesh have agreed to develop Islamic microfinance to assist millions of poor across the world, stakeholders said in Dhaka on Thursday.

The agreement was reached at the three-day "Global Islamic Microfinance Forum" that concluded at the World Trade Centre in Dubai city of the United Arab Emirates (UAE) on Monday.

Delegates of the relevant institutions and organisations from the countries from Asia, Europe, Africa and America expressed their firm commitment to help eradicate poverty by expanding Islamic microfinance in the coming years.

The Islamic microfinance will help the intending people to get petty loans from relevant Islamic microfinance institutions without any interest charges and it is considered to be different from that of Grameen Bank (GB), founded by Bangladesh Nobel Laureate Dr Muhammad Yunus, the sources said.

"It will be different from the microfinance model of the GB because the GB's leading operations are based on interest charges, but Islamic microfinance will be based on profit-and-loss system," a senior official of Islami Bank Bangladesh told the FE.

In case of losses, Islamic microfinance has a provision for reimbursement from other Islamic charities, he said.

The forum also urged the World Bank, Islamic Development Bank, the United States Agency for International Development, International Finance Corporation and other international institutions to include Islamic microfinance as the tool to achieve the Millennium Development Goals (MDGs) of the United Nations.

The three-day forum in Dubai City discussed the process to bring together the Islamic microfinance institutions of the relevant countries on a single platform.

It also discussed the role of Islamic microfinance in alleviating poverty, Shariah rules and related issues of Islamic microfinance institutions and their solutions.

The forum also discussed ways and means to outreach the Al Huda Centre for Excellence in Islamic Microfinance to different countries and to disseminate Qarz-e-Hasna model of Akhuwat.

Known for its excellence in Islamic microfinance, Al Huda Center of Islamic Banking and Islamic Economics (CIBE) is a recognized name in Islamic banking and finance market for training, research and advisory services over the last six years.

The objectives of Akhuwat - an Islamic programme -- are to provide interest-free microfinance services to the poor families to enable them to become self-reliant.

The forum reaffirmed that the Islamic microfinance could be the only viable solution to poverty around the globe.

The forum was told that Islamic microfinance network would be spread all around the world and a specialist Shariah Supervisory Committee will be setup to cope with the Shariah-based rules and guidelines and related challenges that are encountered by Islamic microfinance institutions.

The UAE, Pakistan, India, the United Kingdom, Bangladesh, the United States of America, the United Kingdom of Bahrain, Yemen, Azerbaijan, Turkmenistan, Kirghizstan, Mauritius, Kenya, Canada, France, Egypt, Philippine, Uganda, Iraq, Nigeria and Sudan participated, among others, in the forum.

Md. Ariful Islam of the International Programmes Muslim Aid-Bangladesh, a NGO, also read out a paper on Islamic finance at the forum, following a key note paper of Justice Khalil ur Rehman, Shariah Advisor to Al Baraka Bank Limited.

Among others, the representatives of the World Bank, the Financial and Development Corporation Canada, several financial institutions and non-government organisations (NGOs) of the participating countries also spoke at the three-day conference.

The next global Islamic microfinance forum will be organized by Al Huda Centre of Islamic Banking and Economics in Lahore, Pakistan in November, 2013.