Pakistani microfinance institution (MFI), Farz Foundation, has been awarded a Shari’ah compliance certificate by Mr Mufti Iftikhar Baig, Advisor at Albarka Islamic Bank, and Mr Mufti Mahmood, Head of Online Fatawa Program, Jamia Ashrafia Pakistan.
This certificate ensures that Farz Foundation will practice Murabaha, or cost plus markup sale contracts (Shari’ah-compliant trading), which includes Qarz e Hasna (interest-free loans). Murabaha also prohibits investment in activities deemed inconsistent with Shari’ah, such as alcohol or gambling, and requires that contracts be mutually agreed upon and stipulate exact terms and conditions. According to CGAP (Consultative Group to Assist the Poor), a microfinance policy and research organization, over 70 percent of Islamic microfinance products on offer are consistent with Murabaha.
About Farz Foundation:
Farz Foundation is an Islamic microfinance institution based in Pakistan, which provides the facility of Qarz e Hasna (interest-free loans) to the poor. This money helps people enter into a contract of Murabaha (Islamic trading) or Ijara (Islamic leasing), allowing them to begin an income generating activity. Farz Foundation also provides health and education assistance to clients at no cost in deference to Sadqae Jariah (social responsibility). Farz Foundation does not report financial data to the Microfinance Information Exchange (MIX) Market.
By Matthew Fox, Research Assistant
Sources and Additional Resources
Shariah Certificate News: Farz Foundation Awarded Shariah Certificate, 9 August 2010: http://www.scribd.com/doc/35622391/Shariah-Certificate-News
MicroCapital Brief: Microfinance Institution Farz Foundation and Insurance Provider Pak-Qatar Family Takaful Limited (PQFTL) to Provide Shari’ah-Compliant Insurance Facilities at Lahore, 6 April 2010: https://www.microcapital.org/microcapital-brief-microfinance-institution-farz-foundation-and-insurance-provider-pak-qatar-family-takaful-limited-pqftl-to-provide-shari?ah-compliant-insurance-facilities-in-lahore/
MicroCapital Story: Government of Sudan Issues Directives Requiring Banks to Allocate 12 Percent of Portfolio to Microfinance, 1 May 2009: https://www.microcapital.org/microcapital-story-government-of-sudan-issues-directives-requiring-banks-to-allocate-12-percent-of-portfolio-to-microfinance/
MicroCapital Universe: Farz Foundation: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Farz+Foundation
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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