Islamic Micro Finance by Br. Raffick Nabee Mohammed

8/6/2019 Islamic Micro Finance by Br. Raffick Nabee Mohammed

http://slidepdf.com/reader/full/islamic-micro-finance-by-br-raffick-nabee-mohammed 1/30



Mr. Mamode Raffick Nabee Mohomed

Founder/Secretary Al Barakah MCSL

ISLAMIC FINANCIAL COISLAMIC FINANCIAL CO--OPERATIVESOPERATIVES

TO MEET THE FINANCIAL NEEDSTO MEET THE FINANCIAL NEEDS OFTHE COMMUNITY

Case Study Of:

Al Barakah Multi-purpose Co-operative society LimitedMauritius

International Conference on Islamic Banking & Finance

05-06 April 2011, Mauritius



Mr. Mamode Raffick NABEE MOHOMED

Founder and Secretary of Al Barakah Multi-purpose CooperativeSociety Limited, Mauritius.

Mr . Nabee Mohomed holds a Bachelor of Commer ce, a Post GraduateCertif icate in Education and a Post Graduate Diploma in Islamic Banking & Insurance (IIBI-London). He is a student at IIIBF for the PG

Dip. in Islamic Finance. He is an Educator, also lectures on Islamic Banking & Finance and is an Associate Fellow of the Institute of Islamic Banking and Insurance which is based in London.

Mr . Nabee Mohomed has also done a thesis on ³An empirical study of the Muslim Family in a rural set up´.

He has acted as panelist and speaker at International Conf erences andseminar s on Islamic Finance and presented the case study of AlBarakah MCSL in Trinidad &Tobago, India, Pakistan, Malaysia andSouth Af rica. He has also attended several short cour ses and training.



` Muslim Credit Union (Trinidad & Tobago)- Training in Islamic Finance at M.C.U (3rd Feb. to 21 Feb. 1999)

` National Cooperative Training Centre, Mauritius- Management & Leadership for Leaders of Cooperative Credit Unions,(24 & 25 Oct.2001)

` Cooperative College of Malaysia- Project Preparation and Appraisal (23-27 February 2004)

- Corporate Governance (23-26 May 2005)

` Association of Asian Confederation of Credit Unions (ACCU)- Modern Management of Cooperative Credit Unions (02-03 July 2008)

` International Islamic University, Islamabad (Pakistan)- Attended the 22nd International Programme for Human Resource

Development from 14/11/2005 to 14/12/05 at Dawah Academy,Islamabad.

` Cooperative Muslimine Malaysia Berhad (Malaysia)- Internship in Islamic Finance & Islamic Accounting for Islamic Co-operative Societies (15 December 2008-02 January 2009)



` Islamic Finance & Islamic Financial Institutions`

Concept of Co-operatives` Islamic Financial Co-operatives` Financing intruments of IFC` Reserves & Funds` Case Study of Al Barakah Multi-purpose Co-op Society Ltd.-

Mauritius

` Geographical backgr ound & Muslims in Mauritius` Islamic Banking & Finance & Muslims in Mauritius ` Integrating Islamic Finance in Cooperatives` Organisation of Al Barakah` Legal Framework` Pr oducts & Services` Other activities` Challenges` Conclusion` Opportunities with Al Barakah for Islamic Banking & Finance in

Mauritius



` Islam is a practical way of lif e with its own system

` Inheritance in the economic sphere & scholar s at work

` Initiatives-No working model & since 1960¶s IBF

started±Mit Ghamr 1963

` Emergence of IFI & gr owth

` Satisf action/Criticism

` Types of Islamic Financial Institutions (IFI)

` Dominance & neglected areas & Evolution



` According to Professor Rodney Wilson ³Formal Islamic banking f ir st emerged in theearly 1960¶s thr ough credit unions of Muslim landowner s in Egypt and Pakistan who simply pooled their resour ces and could then in turn draw out f unds for agriculturalimpr ovements on a non-interest basis.´ (The evolution of Islamic banking andemerging trends in Islamic Finance)

` Interest Free Financial institutions (IFFI) of India are the forerunner s in the history of global Islamic f inancial movement. Tracing the history of gr owth of interest f ree

f inancial institutions in India, it is reported that such organized credit society hadshown its presence as early as 1890. According to the directory of Islamic banks inIndia, such efforts in the organized sector in the style of the Patni CooperativeCredit Society Ltd. was established in 1942«

A recent study conducted by Bagsiraj (2003) shows that there are institutions thathave gr own to a size of 14 Islamic Cooperative Credit Society (ICCS) in India. It maybe noted that these institutions primarily f ulf ill the casual social needs of the people ata very small scale. (Dr Rahmatullah-IFFI of India in crisis/Bagsiraj-IFII,published by KAU, Jeddah

in 2003)

` ³The history of Islamic Financial system in Thailand started with the establishment of a cooperative society, Pattani Islamic Saving Cooperative that operates based onshariah in 1987«.. These Islamic cooperative societies have successf ully establishedthemselves as viable f inancial institutions in managing and mobilizing Muslims in this region.´ ( Islamic banking in Thailand: pr ospects and challenges (Sudin Haron &Kumajdi Yamirudeng)



` Concept of cooperative:- Fr om the beginning of human society, cooperation has always been a vital f actor in human development. - As a social creature, it is the natural urge of man to cooperatewith each other .

- Cooperation conveys the idea of helping each other andmaking joint efforts to achieve a common goal.

` The Cooperative movement emerged in the middle of the 19thcentury by the Rochdale Pioneer s. On the 24th October 1844, inRochdale, Lancashire England, a gr oup of people f aced with

economic exploitation and deprivation set up a cooperativestore, based on the principles of self -help and mutual help. Theydef ined a set of principles which became the basis for thecooperative ideology which has spread all over the world be it acapitalist, socialist or Muslim society.



` A cooperative is an autonomous association of per sons united voluntarily to meet their common economic, socialand cultural needs and aspirations thr ough a jointlyowned and democratically contr olled enterprise. (www.ica.coop)

` 7 principles of cooperatives:

1. Voluntary and open member ship (VoM)

2. Democratic member contr ol (DmC)

3. Member economic contr ol (MeC)

4. Autonomy and independence (A&I)5. Education, training and information (EtI)

6. Co-operation among co-operatives (CaC)

7. Concern for community (Cf C)



` Sector s of the economy-PMT

` Class of Co-op societies/Multi-purpose Co-operatives- Consumer Co-op, Pr oducer s, Marketing, Housing, Catering,Financial Co-operatives/Credit unions etc.

` What is a Credit union?- A credit union is a f inancial cooperative that may acceptsavings, deposits, pr ovide credit and other f inancial services to its member s. - Credit Unions are f inancial cooperatives which are in eff ectcommunity banks.- Member ship: people f r om all walks of lif e,

- Common bond- Owned & contr olled by shareholder s/member s- Capital: mobilising f r om shares ,savings & deposits f r ommember s- Financing/not for pr of it maximisation- Surplus-back to shareholder s



`

Generally Conventional co-operatives/credit unions areinterest-based` Credit unions called by diff erent names:

- In Af rica-Savings And Credit Cooperative Societies (SACCOS) which emphasise on savings before credit. - In Af ghanistan-(IIFC) Islamic Investment and Finance

Cooperatives which comply with sharia.` IFC are institutions based on the principles of Islamic

Finance. ` Efforts over the past 30 year s to set up IFC` Community-based and pr oviding Islamic f inancial services

to the community` Islamic Financial Co-operatives ar ound the globe

(T&T, Canada, Malaysia, Thailand, Indonesia, USA,Australia, India, Singapore, Afghanistan«)



Why IFC?

1. Conceptual framework³Cooperate with all in what is good and pious and do notcooperate in what is sinful and wicked«.´ (Q-5:2)

2. Legal framework is less regulated than the corporate sector (Cooperative Societies Act ,CU Act) ± Shariah-compliant

3. Values - Islamic Finance±based on Islamic ethics: justice,

sharing, cooperation.- Cooperatives based on values: honesty, equity,equality, solidarity, self-help, etc.

4. Easy formation & more elastic5. Small capital requirement6. Community ±based & more people-oriented( IEViews..)

7. Spread ownership of business and reduce concentration of wealth

8. Different purposes - open to any type of economic activity9. Incentives & Benefits ±Tax10. Democratic



`

Murabahah` Ijarah

` Mudarabah

` Musharakah

` Diminishing Musharaka` Istisna

` Qard-ul-hasanah/IFL



`

Statutory Reserve ± according to Coop Act` Dividend equalization Fund

` Social Takaf ul Fund

` Pr of it Equalisation Reserve

` Zakat Fund



Al

BarakahMulti-purpose

Co-operative

Society

Limited

Mauritius



` Mauritius-gateway to Africa, South Asia & Asia

` Multi-religious society:

Population-1.3 M

Hindu :51%, Christians:28%,

Muslims :18%, Chinese :3%

` Muslims presence in all walks of life: Islamic schools,

professionals, orphanage, business, etc.

` Muslims have contributed enormously in the dvp. of

the economy` Business operated as family business

` But as a community, little has been done to establish

the financial system of Islam.



Keen desire by Muslims to re-establish their

identity.

Establishing an Islamic bank in Mauritius in

1990¶s was a manif estation of this desire.

To become part of the Islamic banking

phenomena.

Preliminary work carried out.Formation of a Credit Union in the Cooperative

sector (AL BARAKAH)!



Why Al Barakah?1. To provide an alternative to the interest-

based financial institutions for the

community. (Community-based)2. To provide halal investment opportunities

and returns.

3. To contribute in a halal way to the overalldevelopment of the economy.

4. Formation of Al Barakah

(Registered on 10th June 1998)

Islamic Finance through

Cooperatives



Operates:Within the Co-operative Societies Act 2005

Within the f ramework of its rules andregulations

In accordance with Islamic Financial Laws.



` Advisor s ± Dr . Monzer Kahf (USA)

Dr . Ashyraf Dusuki(Malaysia)

Br . Imtiaz Ali (T&T)

Individuals becomemember s/shareholder s

Shareholder s elect B.O.D,

Internal Contr oller & Auditor at AGM

B.O.D nominates sub-

committees & advisor s



To operate as a f inancial institution based on

Islamic cooperative principles and pr oviding a

wide range of services on an interest-f ree basis

To be a leading Cooperative Society in the f ield of

Islamic Finance for a f air and just society.

VISION

MISSION

GOALS

To present a practical model of Islamic Financethr ough the co-operative sector .

To lay the foundation for an alternative f inancialsystem to the Mauritian population at large.



1. To create a source of credit for its membersfor provident and productive purposes.

2. To provide savings facilities to members

3. To create the framework to enable members

to manage their financial resources for their mutual benefit.

4. To promote the welfare and economicinterest of its members.

Objectives



Tailor-made schemes based on Murabahah:1. Household General Financing

2. Computer Financing

3. Traders Financing

4. Home Financing5. Air Ticket Financing

6. Motor Vehicle/Cycle Financing

7. Land & Property Financing

Istisnaa Financing (Manufacture-Sale) Partnership /JV with shareholders (M&M)

Interest-Free Loan (Qard-al-Hasan)

Hajj Savings Account



Statutory Reserve

Pr of it Equalisation Reserve

Dividend Equalisation Fund

Social Takaf ul Fund

Creating awareness about Islamic Finance.

Organizing lectures, seminar s, conf erences and

workshop.Organizing mini trade f air, socio-cultural

pr ogramme.



1. Individual/organisational/government level2. Legal Framework

3. Public acceptance

4. Economic potential

5. Human Resour ce

6. Mass Education

7. Competition



` Mauritius wants to connect to this sophisticated andgr owing global phenomenon that spans banking, non-banking f inancial services, micr o-f inance, insurance andcapital markets.

` We will also set the regulatory f ramework for leasingcompanies to market products which are shari¶ahcompliant. (60)

` And to level the playing f ield appr opriate amendments willbe made to the legislation to make normal banking andIslamic banking tax neutral.(62)

Budget speech 2008/2009 - Minister of Finance



Legal & Regulatory Framework

* The Banking Act 2004-Amendments 2007

* The FSDA 2001-(Non-banking activities)

* The Cooperative Societies Act 2005

Member ship for corporate bodies Pr o jects/Joint ventures etc.



1. 12 rs of o r tio

2. An -o ner

. Isl ic f inance at iffer ent levels

. ell- eing of all citi ens



Mamode Raffick Nabee Mohomed

Founder/Secretary Al Barakah M.C.S.L

E-mail: [email protected]

www.albarakahcoop.org

Tel: (230) 6275766,



Head Office:

192- Ahmad Block, New Garden Town , Lahore, PakistanPh: +92-42-35913096-8, 35858990, 38407850

Fax: +92 -42-35913056

E-mail : [email protected]

Web: www.alhudacibe.com

Islamic Micro Finance by Br. Raffick Nabee Mohammed

Documents

Transcript of Islamic Micro Finance by Br. Raffick Nabee Mohammed