Microfinance Program: Muslim Aid Bangladesh (MAB) is the sister concern of MABFO. Muslim Aid started its microfinance program in 1993 with a vision to help the poorest people of the society to graduate from poverty. The general objective of Muslim Aid microfinance is to reduce poverty through the provision of micro and small investment, savings and insurance scheme following the principles of Islamic financing.
The broader objective is to ensure financial inclusion of marginalized people and promote socially responsible lending. After a few initial years, the ambit and horizon of microfinance programme expanded for it introduced new windows of opportunities. Small and medium enterprises (SMEs) and agro based microfinance were integrated into the programme to build entrepreneurship at local level. On the other hand, it also introduced special microfinance projects to support people living with hardcore poverty. Muslim Aid’s financing transactions adhere to Islamic mode of financing and they are generally quard-e-hasana; murabaha; bi-muazzal and musharaka.
Microfinance programme now covers 55,885 participants of 1,489 villages from 31 districts of the country. Muslim Aid’s microfinance is one of the biggest Islamic micro-financing initiatives and is ranked within 50 microfinance institutions (MFIs) out of 745 MFIs in Bangladesh.
Registered with the Microcredit Regulatory Authority (MRA) of the Government of Bangladesh, Muslim Aid runs it microfinance activities with proper compliance with government directives and guidance. It maintains partnership with different national and international organizations that promote microfinance for development such as Islamic Development Bank (IDB), Institute of Microfinance (InM), Market Development Forum and Credit & Development Forum (CDF).
Muslim Aid’s microfinance approach stands distinctly different from traditional systems as it provides financial support to its beneficiaries without collateral. A unique feature of this programme is its ‘finance-plus’ approach. It means in addition to providing investments and training, programme participants are supported through an integrated set of services to strengthen the supply chains of the enterprises undertaken by its members to ensure access of members to quality inputs; and to support members in marketing their products. Developing women entrepreneurship is also another distinctive aspect of Muslim Aid’s microfinance operation. Moreover, the hardcore poor receive financial assistance without service charge, a unique feature in overall microfinance operation in the country.
Muslim Aid’s microfinance operation has three programmatic features: (1) hardcore poor programme; (2) agro-based microcredit; and (3) small and medium enterprises (SMEs). The hardcore poor programme (HPP) is designed for ultra-poor; landless; and people in rural areas who are not counted as target beneficiaries by traditional microfinance organizations because of their lack of finance worthiness due to their extreme financial vulnerability. The HPP is mainly quard based, which means loan is given without collateral and service charge.
Muslim Aid in partnership with Islamic Development Bank (IDB) established an agro-based microfinancing to create sustainable livelihood opportunities for people of cyclone SIDR affected areas. This is also interest free support. This financing is also known as Fael Khair. It is to be mentioned that Fael Khair programme is an outcome of the donation of an anonymous Muslim who gave US$ 130 million in charity to relieve the Cyclone Sidr victims and to protect locals from similar calamities in future. Fael Khair are Arabic words that mean ‘philanthropist’ in reference to the anonymous person who made the charity. Fael Kahir programme is administered by Islamic Development Bank (IDB) and Muslim Aid is a partner in implementation. Additionally, Muslim Aid runs SME financing to upgrade the socio-economic condition of small entrepreneurs. Under this assistance, families with low-income are supported additionally. Both male and female entrepreneurs receive SMEs assistance.