Farz Islamic Microfinance Model

First Islamic Microfinance in Pakistan 1

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FARZ METHODOLOGY


Vision“To bring social change through

poverty alleviation by improving

productivity and capacity of clients

and staff”

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MissionEmpowering the poor

through innovative products and diverse

business opportunities, by integrating social

performance focused microfinance with collaborative community

health and education partnerships.


FARZ METHODOLOGYGraphically Concept

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Step-2 Murabaha

Offe

r fo

r Mem

bers

hip

thro

ugh

Mur

abah

a

Our Target Household

Intend to do

Membership done via Female

Request for Mem

bership through Murabaha

Step-1 Takaful

HouseholdBusiness

Step-1

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Member

Business Education

Household

Step-3

BusinessBusiness

Profit generated from Business

Meet Business Expanses

Meet Household Expanses

Reinvestment in Business

Installment of Farz Committee

Step-2

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Farz Committee Pool

FF Provides facility to client (See Farz Committee)

Member

Household

BusinessBusiness

Profit generated from Business

Installment of Farz Committee

Mem

ber gives installm

ent to FF

Step-3

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Process of Farz Committee

Committee Pool and total Collection= PKR: 2,200

10 Members of Community from One Cluster


Farz Foundation as 1 MemberFarz Foundation as 1 Member

Share PKR:200In Committee Pool

Each Member

Share PKR:200

In Committee

Pool

Committee Group MemberCommittee Group Member

From every 3rd to 11th,member gets the total collection2,200 through a monthly lucky Draw . (1st and 2nd collection go to FF & group organizer)

Step-3-a

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Process of Farz Committee

Members get PKR: 2,440 after one Year or Monthly PKR:20

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

Members do partnership with FF

PK

R: 2,200 +

220 in one year

Committee Pool and Total Collection= PKR: 2,200

Step-3-b

To meet immediate Needs

Build asset

Reinvest in Core Business

FF generates other source of Income

for their Client


Option

PK

R: 2

,20

0

11

Household

Health Care Awareness

FF Provides health care awareness to clients

Step-4

12

Household

Future Protection Program

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

Step-5


FARZ METHODOLOGY


TARGET MARKET

Business & Environmental education

Health

Financial Service

An Integrated Approach


TARGET MARKET

Upper

Middle

Lower


LowerNon-Poor

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

Poor

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

Moderately Poor

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

Poorest of the poor

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

Product Packages for Each Market


Murabaha

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


MurabahaTarget for One Social Center (Branch)

Product Target

Murabaha (Small) 1,080 Clients

Murabaha (Medium) 180 Client

Murabaha (Large) 0

Year 1st

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Clients Graduation Strategy

1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year 9th year 10th year0

200

400

600

800

1000

1200

1080

734

499

340

231

157

10773

49 34

180

468

553536

473

396

319

251

194

148

0

58

207

384

556

707

834

936

1017

1079

Murabaha Small Murabaha MediumMurabaha Large


Identification of Area for Operation 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.


Staff Hiring

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

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Capacity Building of Staff 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

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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.


Social Center (Branch) Opening

Social Center Opening Ceremony Mobilization


Kicking of Operations

Social Manager

Accountant

SO Small

Murabaha

SO Small

Murabaha

SO Small

Murabaha

SO Medium

Murabaha

Office Boy

Branch Structure


Cluster Manager

Group Leader

Member

Member

MemberMe

mber

Group Leader

Member

Member

MemberMe

mber

Group Leader

Member

Member

MemberMe

mber

Cluster structure

CLUSTER COMMITTEE


Delivery ProcessStep 1 • MOBILIZATION

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

Step 3 • TO FINALIZE THE CLUSTER MANAGER AND GROUP LEADERS

Step 4 • HOME SCREENING

Step 5 • BUSINESS SCREENING

Step 6 • FINAL FORMATION MEETING

Step 7 • SALE AGREEMENT AND DELIVERY OF ASSET & STOCK


MOBILIZATION

Identification of potential clients within above mention target market.

Identification of the potential businesses.


COMMUNITY MEETING

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.


HOME SCREENING + Know Your Client & Application Form Filling

Verification of Client’s according to the member selection Criteria

Information Collection (Home Related)


BUSINESS SCREENING + Know Your Client & Application Form Filling

Verification of Client’s Business according to the member selection Criteria

Financial Analysis Repayment Capacity Business Information Collection


FINAL FORMATION MEETING Approval of Trade (Murabaha)

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


ASSET/STOCK PURCHASING

Selection of standardize Venders/Whole Sellers To Purchasing of Asset / Stock as per demand of

Client’s Business


SALE AGREEMENT and DELIVERY OF ASSET/STOCK

Transparency of Sale Agreement Transfer of Ownership


MONITORING & EVALUATION


Daily, weekly, monthly, quarterly and six monthly reports system.

Field visits of bottom to top Management. Fortnightly Meetings with 100% Clients. Social Performance Management.

MONITORING & EVALUATION


Asset Building


Farz CommitteeHeads 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 One Cluster

Min=1 and Max=3

Frequency of Committee Installment Fortnightly

Frequency of Committee Draw (lucky draw)

Every Month


Committee Group





Farz Foundation as a MemberFarz Foundation as a Member


Each Member

Share PKR:200

In Committee

Pool

Farz Foundation as Committee Manager (FF)

Farz Foundation as Committee Manager (FF)

1st Total Collection of Committee Pool goes to Farz Foundation

1st Month of Committee


Members become partner of FF

PK

R: 2,200

PK

R: 2,200 +

220 in one year







Each Member

Share PKR:200

In Committee

Pool

Committee Group OrganizerCommittee Group Organizer

2nd month Total Collection of Committee Pool goes to Committee Group Organizer

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

2nd Month of Committee



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

Members do partnership with FF

PK

R: 2,200

PK

R: 2,200 +

220 in one year






Each Member

Share PKR:200

In Committee

Pool


3rd to 11th, every month Total Collection of Committee Pool goes to Committee Members through Lucky Draw

3rd to 11th Month of Committee


Health Care


Health Care

Organizing Eye care Camps Health Awareness Program


Future Protection

Program


Future Protection Program Educational Support to Community children


Entrepreneur Development

Program

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Clients Capacity Building Strategy

1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year 9th Year0

50

100

150

200

250

300

350346

235

160

109

74

50

3423

16

58

150

177172

151

127

102

80

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Trained for Murabaha Medium

Trained for Murabaha Larg

Farz Islamic Microfinance Model

Economy & Finance

Transcript of Farz Islamic Microfinance Model