Question

1. Where and how can Fintic play a meaningful role in key Islamic financial services such as Takaful, Zakat and Waqf?

Answer 1

Answer: Takaful is a type of Islamic insurance wherein members contribute money into a pool system to guarantee each other against loss or damage. Takaful-branded insurance is based on sharia or Islamic religious law, which explains how individuals are responsible to cooperate and protect one another. Takaful policies cover health, life, and general insurance needs.

In the last decades, Islamic finance has developed immensely as one of the most important trends in the financial world. This phenomenon is not only because the demand among Muslim for Islamic financial products and services, but also due to the Islamic finance sectors have contributed significantly to the global GDP (Ahmad and Ahmad, 2009). Among other things, Islamic banking is evidenced as the fastest growing industries which have posted double-digit annual growth in 30 years (M.Iqbal and Molyneux, P (2005)

Key words: Islamic micro finance, Islamic banking, zakat and waqf institutions, poverty alleviation.

Islamic finance was designed at the birth of Islam to balance the wealth in society and to stop economic exploitation. ... Islamic finance aims to improve social justice through wealth redistribution and fair financial dealings

The objective of this paper is to present theoretical proposals for institutional structure in the context of Islamic Microfinance by first comparing Conventional and Islamic microfinance institutions and then by highlighting some of the pioneering work of conventional microfinance models that paved the way for Islamic Microfinance.In this paper, we review the literature of microfinance models that simultaneously deals with several facets of poverty by combining Waqf and Zakah principles together or individually.There are three models examined in this paper i.e Waqf-Based Islamic Microfinance Institutions, a Model of Zakah and Awqaf-based MF Organizations and an Integrated Awqaf and Zakah Model of Microfinance. Both Zakah and Waqf mechanisms are considered for Islamic microfinance not only because of their frameworks that are in accordance to the Shariah but they are the original concepts provided in Islam that serve people in need i.e the poor. In tandem with the doctrine of microfinance, Zakah and Waqf are seen as tools best suited to assist the poor who require financing and ultimately could be effective for poverty reduction. The paper derives recommendation for integrating microfinance models into the overall economic policy.