AlHuda-Centre of Islamic Banking and Economics (CIBE) is a well known name in Islamic Banking and Finance sector which focuses on training, awareness, advisory and publications on Islamic Banking & Finance in order to promote the industry. AlHuda CIBE has organized a successful Conference "3rd Global Islamic Microfinance Forum" held on 6th & 7th October, 2013 in Dubai. AlHuda CIBE is very much pleased to share the topics and presentations being held in the Forum.

2. INCLUSIVE FINANCE
&
Muakhat Paradigm
Dr. Muhammad Amjad Saqib
06-10-2013

3. Financial Inclusion
Financial inclusion refers to a process that
ensures the ease of access, availability and
usage of the formal financial services
including savings, loans, insurance and leasing
for all members of the society.
• Major hurdle in achieving financial inclusion is the
diversity of the clientele
• Similar or uniform financial instruments cannot
meet the needs of the entire population
• Market principles alone are insufficient to achieve
financial inclusion

4. Akhuwat’s Model of Financial
Inclusion
The underlying aim of the model is to alleviate
poverty through an equitable distribution of
resources. In doing so, the model addresses both
the needs and reciprocal responsibilities of each
member of the society. To achieve this, the
model has been closely aligned with the spirit of
volunteerism, moral principles and the Sharia.
The model derives inspiration from Muakhat-a-Medina.

5. Story of Akhuwat
Begins with the story of a
poor widow

6. Rest is history

7. Fundamental Principles
1. Creation of a Credit Pool
2. Interest free loans from this pool to the
poor and needy
3. Use of mosque and church for social and
financial intermediation
4. Resource generation through philanthropy
and donations
5. Spirit of volunteerism
6. Converting borrowers into donors

8. Progress
PROGRESS INDICATOR
TOTAL
Total Benefiting Families
380,000
Loans Utilized by Males Entrepreneurs
240,000
Loans Utilized by Females Entrepreneurs
140,000
Amount Disbursed
PKR 5.8Billion
Percentage Recovery
99.87%
Active Loans
190,844
Outstanding Loan Portfolio
PKR 2,174,695,0
23
Number of Branches
255
Number of Cities and Towns
140

9. Salient Features of Akhuwat’s
Model of Inclusive Finance
1. Moral Principles complementing Financial Logic as
dictated in the Sharia
2. Extensive and wide spread use of Qarz-e-Hassan;
interest free loans which will be used to support the poor
to become self-reliant
3. Institutionalizing the circulation of wealth
4. Reliance on philanthropy for social investment and
primary sources of funds
5. Transforming borrowers into donors through the
promotion of a spirit of self-reliance, volunteerism and a
system based on mutual support

10. Salient Features of Akhuwat’s
Model of Inclusive Finance
6. Eradication of interest from the financial system
7. State to play a proactive part in facilitating and
complementing the resources of the society
8. Sharia complaint microfinance to be used to
support those who are above the poverty line
9. Promotion of Islamic Banking services amongst
those
who
are
already
being
conventional and Islamic banks
catered
by

11. Classification of Groups
Group
Financial Services Reasons
Poorest and
Destitute
Zakat and Sadqat
Poor
Qarz-e-Hassan
Vulnerable
Poor
Sharia Compliant
Microfinance
Average,
Well-to-do,
Rich
Islamic Banking
These individuals are unable to support themselves or
their families due to circumstances or ailments which
prevent them from being economically active thus can
only be supported directly through Zakat and Sadqa
This group must be empowered through Qarz-e-Hassan
as they have the potential and ability to become selfreliant and contribute to the local economy as opposed
to burdening it
To diffuse the effects of shocks which may push these
individuals further down the economic ladder and to
enable them to enhance their potential and livelihood, a
host of sharia compliant microfinance services will be
offered.
As the members are already economically secure, they
will be catered through Islamic Banks. Revenue may be
generated from the provision of financial services.

12. Overview of Resource Allocation
30%
Group IV provides
resources to support
Group I and II.
Average, Well-todo, Rich
The 30% at the top
to support the
30% at the bottom
Islamic Banking
40%
Sharia Compliant
Microfinance
Vulnerable Poor
25%
Group I and II
supported through
philanthropy and
generosity
Qarz-e-Hassan
Poor
5%
Poorest & Destitute
Zakat and Sadqat

13. Role Of State
• Poverty Alleviation is joint responsibility of Civil
Society, Private Sector and State
• Experience of Pakistan
• Government of Punjab
• Government of Gilgit-Baltistan
• Government of Pakistan

14. Sources of Funds
Public
Authorities
International
Agencies
Commercial
Funding
Philanthropy
FUNDS

15. Conclusion
• Inclusive Finance
• Segmentation
• Separate need for every segment
• Sharia Compliant solutions
• Collaboration between State, Private Sector and
Civil Society
• Developing
a
sustainable
mechanism
converting borrows into partners and donors
by

16. LOAN DISBURSEMENT
METHODOLGY

17. A Loan Disbursement Event in a Mosque

18. A Loan Disbursement Event in a Mosque

19. Akhuwat Event in a Mosque (Chiniot)

20. Akhuwat Event in a Mosque (Lahore)

21. Akhuwat Event in a Mosque (Lahore)

22. Akhuwat Event in a Mosque (Mithan Kot)

23. Akhuwat Event in a Mosque (Rajan Pur)

24. Akhuwat Event in a Mosque (Choti – D.G Khan)

25. Awareness Event in a Mosque

26. A Loan Disbursement Event in a Mosque

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