Farz Islamic Microfinance Model

First Islamic Microfinance in Pakistan 1

“To bring social change
through poverty alleviation
by improving productivity
and capacity of clients
and staff ”

Empowering the poor through
innovative products and diverse
business opportunities, by
integrating social performance
focused microfinance with
collaborative community health and
education partnerships.
4

Intend to do

Our Target
Household

Request for Membership through Murabaha

Offer for Membership through Murabaha
Household
Business
Membership
done via
Female

Step-1 Takaful

Step-2 Murabaha

6

Meet Business
Expanses
Household Reinvestment in
Profit generated Business
Business from Business
Member Meet Household
Business Expanses
Installment of
Farz Committee

Business
Step-3
Education

7

Household
Profit generated Installment of
Business from Business
Member Farz Committee
Business

installment to FF
Member gives
FF Provides facility to client (See Farz Committee) Farz Committee
Pool

8

From every 3rd to
11th,member gets the
Share PKR:200 total collection2,200
In Committee through a monthly lucky
Pool Draw . (1st and 2nd
collection go to FF &
group organizer)
Farz Foundation
as 1 Member
Committee Pool and Committee Group
total Collection= PKR: Member
2,200
10 Members of
Community from
One Cluster

9

Total Collection= PKR:
Member
2,200

To meet

PKR: 2,200
immediate Needs

PKR: 2,200 +220 in one year
Members Members
get PKR: do
2,440 partnership Option Build asset
after one with FF
Year or
Monthly Reinvest in Core
PKR:20
Business

Investment Pool of Farz Foundation
(FF & Community are partners in MURABAHA
Business)

FF generates other
source of Income
for their Client

10

Health Care Awareness

Household
FF Provides health care
awareness to clients

11

Future Protection Program

FF gives awarness to clients about their Household
children’s education through
“Children Education Awareness
Program”

12

Financial
Service
Health

Business &
Environmental
education

TARGET MARKET

Upper

Middle

Lower


• Large Murabaha + Takaful + Committee (participatory
Non-Poor saving) +Health Care Awareness +Business &
Environmental Education

• Medium Murabaha +Takaful + Committee
Poor participatory saving) +Health Care Awareness
+Business & Environmental Education

Moderately • Small Murabaha + Takaful + Committee (participatory
saving) +Health Care Awareness +Business &
Poor Environmental Education

Poorest • Zakah or charity in kind or in shape of income
generating tools) +Health Care Awareness
of the poor +Business & Environmental Education


Product Trade Size
Murabaha (Small) PKR: 5,000 to 30,000
Murabaha (Medium) PKR: 31,000 to 80,000
Murabaha (Large) PKR: 81,000 to 150,000


Product Target
Murabaha (Small) 1,080 Clients
Murabaha (Medium) 180 Client
Murabaha (Large) 0


1200

1080 1079

1017
1000
936

834

800
734
707

Murabaha Small
600 553 556
536 Murabaha Medium
499 Murabaha Large
468 473

384 396
400
340
319

251
231
207 194
180
200 157 148
107
73
58 49
34
0
0
1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year 9th year 10th year
19

 To allocate the Area for Social Center (Branch)
 To allocate the Potential working areas for social center
 Product need assessment.
 Potential businesses.
 Cash flow of different businesses.
 Size of micro trade.


 Add for staff hiring in local News paper.
 Collection of CVs as per given date.
 Short listing of CVs and finalize prospective
Candidates for interview.
 Sending calling letters to all selected interviewees.
 Conduct 1st interview


 To deliver the orientation of FARZ FOUNDATION to
final candidates for jobs.
 To deliver three days Step-in-Training to all Selected
staff.(In house)
 Islamic banking & finance . Conventional microfinance
 Farz Methodology
 Basic Selection criteria of FARZ FOUNDATION
 Area survey
 Effective Mobilization skills
 Clients appraisal training
 Cluster formation steps
 Conduct of community meetings
 Customer relationship management
 Social performance management
 Delinquency management
 Monitoring 22

 Three days on the job training to the staff.
 Basic Selection criteria of FARZ FOUNDATION
 Area survey
 Effective Mobilization skills
 Clients appraisal training
 Cluster formation steps
 Conduct of community meetings
 Customer relationship management
 Social performance management
 Monitoring
 Islamic banking & finance . Conventional microfinance
 Farz Methodology
 Interview and selection for one month internship
 Selection for 11 month on a contract.
 After 11 month, contract extension / permanent
employee. 23

 Social Center Opening Ceremony
 Mobilization


Social Manager

Accountant

SO SO SO SO
Small Small Small Medium
Murabaha Murabaha Murabaha Murabaha

Office Boy


Cluster
Manager

Group Group Group
Leader Leader Leader

Member Member Member





• MOBILIZATION
Step 1

• COMMUNITY MEETING CONDUCTED BY SOCIAL OFFICER (SO)
Step 2

• TO FINALIZE THE CLUSTER MANAGER AND GROUP LEADERS
Step 3

• HOME SCREENING
Step 4

• BUSINESS SCREENING
Step 5

• FINAL FORMATION MEETING
Step 6

• SALE AGREEMENT AND DELIVERY OF ASSET & STOCK
Step 7


 Identification of potential clients within above
mention target market.
 Identification of the potential businesses.


 What is the eligibility criteria for taking our product
 Systems and procedures for taking our product.
 Your and our responsibilities for managing social
performance at cluster level.
 Introduction of program.


 Verification of Client’s according to the member
selection Criteria
 Information Collection (Home Related)


 Verification of Client’s Business according to the
member selection Criteria
 Financial Analysis
 Repayment Capacity
 Business Information Collection


 Briefing to the Clients about Sale, purchase,
price, cost, profit, sale agreement, System,
Procedures and repayments Schedule


 Selection of standardize Venders/Whole Sellers
 To Purchasing of Asset / Stock as per demand of
Client’s Business


 Transparency of Sale Agreement
 Transfer of Ownership


 Daily, weekly, monthly, quarterly and six
monthly reports system.
 Field visits of bottom to top Management.
 Fortnightly Meetings with 100% Clients.
 Social Performance Management.


Heads Features
Committee Size Min= PKR:100 and Max=unlimited
Period of Committee Cycle 11 Month
Participants of Committee in Each Group 10 Members + 1 Farz Foundation=11
Number of Committee Groups under Min=1 and Max=3
One Cluster

Frequency of Committee Installment Fortnightly
Frequency of Committee Draw Every Month
(lucky draw)


1st Month of Committee

1st Total
Collection of
Share PKR:200 Committee Pool
In Committee goes to Farz
Pool Foundation
Farz Foundation
as a Member
Committee Pool and Farz Foundation as
Total Collection= PKR: Committee Manager
2,200
10 Members of (FF)
Community from
One Cluster


2nd Month of Committee

2nd month Total
Share PKR:200 Collection of Committee
In Committee Pool goes to Committee
Pool Group Organizer
Farz Foundation
as 1 Member
Total Collection= PKR:
Organizer
2,200
10 Members of
Community from

One Cluster Members
Members

PKR: 2,200
get PKR: become
2,440 partner of
after one FF
Year or
Monthly
PKR:20

(FF & Community are partner in MURABAHA Business)


3rd to 11th Month of Committee

3rd to 11th, every month
Total Collection of
Committee Pool goes to
Share PKR:200 Committee Members
In Committee through Lucky Draw
Pool
Farz Foundation
as 1 Member
Total Collection= PKR: Member
2,200
10 Members of
Community from
One Cluster


PKR: 2,200
Members Members
get PKR: do
2,440 partnershi
after one p with FF
Year or
Monthly
PKR:20

(FF & Community are partner in MURABAHA Business)


 Organizing Eye care Camps
 Health Awareness Program


 Educational Support to Community children


346
350

300

250
235

Trained for Murabaha Medium
Trained for Murabaha Larg
200
177
172
160
150 151
150
127

109
102
100
80
74
62
58
50
50
34
23
16

0
1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year 9th Year 66

Farz Islamic Microfinance Model

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Farz Islamic Microfinance Model