Islamic Microfinance System as an Alternative to Poverty Alleviation
Keywords:Musharka, Mudarbah, Ijarah, Qardhul Hasan
This paper will discuss the concept of poverty and Micro finance. And it will also discuss the conventional micro finance and its alternative Islamic Micro Finance. As in today’s world Islamic Banking and Islamic products are growing globally and are appreciated. In this paper we will explain the model of Islamic Micro Finance and different products that are related to Islamic Micro Finance, which are Musharka, Mudarbah, Ijarah, Qardhul Hasan. These products provide financing to the entrepreneur as best alternative to the conventional loans. These financing are providing against Riba Free loans, which is prohibited in Islam. These schemes, however, require specialized skills in managing risks inherent in the structure of the contracts. In theory, different schemes can be used for different purposes depending on the risk profile of the micro entrepreneurs.