Analysis of Islamic Financial Instruments in Terms of Microf

DOCUMENT EXCERPT

• in the name of allah (god), the compassionate, the merciful " there is no deity except allah and muhammad is the messenger of allah o my sustainer! open up my heart (sadr) ( to thy light). and make my task easy for me. and remove the impediment from my speech. so that people may understand what i say / so that they might fully understand my speech. (sura taha -20: 25-28) analysis of islamic financial instruments in terms of microfinance development for poverty alleviation zohra jabeen institute of management sciences, peshawar islamic microfinance conference, islamabad july 22,2009 this paper how islamic financing instruments can be used

• renting out service can be for a very small period of time, say a day or two and it can also be for longer periods of time say one year or many years, depending upon the nature and utility of the asset under consideration

• need for more awareness creation about them in their actual generic form rather than even the modified forms in some cases. islamic financial instruments- the practice observed while analyzing some of the products of islamic banking and islamic capital markets they have undergone certain additions and amendments

• and if the market price of the crops has escalated very much at the time of crops' harvesting and sale, out of goodwill, the farmers should be given a little extra too so that they won't feel cheated because of their poverty and the subsequent advance payment

• this is what the islamic financing techniques embody, in one form or the other. these can be fruitfully applied for poverty alleviation at the grassroots level as well as for economic development at all levels of the society

• it detests mere ownership of money as the reason for earning a reward in the shape of interest. this it terms as the root cause of injustice and extortions in the society brief introduction islamic instruments or methods of economic transactions

• denying the due share to resources and access to opportunities can cause a major damage which no amount of microfinance can repair

• is there anything seriously wrong with the distribution of rewards ( of factors of production and the definition of factors of production) in the conventional system? resource-sharing & providing long term sustenance

• in this regard, it is similar to conventional leasing (except difference of interest and risks ) nature of assets given on ijara'h basis

• 'compound' ijara'h- inclusive contracts designed to transfer ownership to the lessee over a period of time through installments ijara'h's utility in microfinance

• the mechanism was useful for giving a long term durable /usable commodity (or a horse , mule etc. for transportation) on rent

• salam can be best undertaken between the actual user of the commodities and the farmers who grow the crops conclusion

• modified islamic contracts suiting the specified market conditions and requirements- although sharia'h compliant islamic financial instruments- the practice

• sharing of crops' yield, 50:50 or the monetary equivalent as rent

• however, again exploitative pricing ( setting too low a price) must be avoided ,

• provide them opportunity to produce more and good quality products when demanded

• having an asset-backed ( and services based) requisite for profit-making economic transactions. brief introduction islamic finance

• one wonders why poverty was rising amidst the economic growth till 2007?

• primarily due to the money market and capital markets' prevailing trends,

• originally, ijara'h was not meant for transfer of ownership of the underlying asset

• to solve the microfinancing needs of the neglected population this paper

• should not perish after usage by the lessee,

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DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic banking

KeyWords

contract price sale asset financing lease client purchase ijarah payment profit musharakah lessee amount commodity housing agreement contracts ownership project

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DOCUMENT REFERENCES

Number of Pages

36

Published Date

2016-09-17 00:25:06