RIBA (Interest) [ذَلِكَ بِأَنَّهُمْ قَالُواْ إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَواْ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَواْ] (That is because they say: "Trading is only like Riba,'' whereas Allah has permitted trading and forbidden Riba) (Surah Al-Baqarah :275)

Islamic Mode of Financing V/S Conventional Mode Islamic Financial Institutions Conventional Financial Institutions Deal with goods as well as documents Deal with documents only Supply/Receipt of Goods against money Money/Documents are traded against Money/Document

Islamic Finance for the Poor Micro Entrepreneur Islamic MF Poorest of the Poor Qard – e – Hasna Destitute - Zakat

COMMON MODES OF ISLAMIC FINANCING PARTNERSHIP BASED Musharka Mudarba TRADE BASED Murabaha Musawamah Sala’m Istisna RENTAL BASED Ijara Diminishing Musharka

CENTRE FOR WOMEN COOPERATIVE DEVELOPMENT

ENTERPRISE DEVELOPMENT VISION POVERTY ALLEVIATION THROUGH ENTERPRISE DEVELOPMENT

MISSION To support the Potential Poor in Pakistan break out of Poverty cycle by providing them with Necessary Borrower Islamic Finance, Business Development Services and Advocating their Rights.

BOARD OF DIRECTORS *Mrs. Farida Tariq, Mr. Ejaz Ahsan CHAIRMAN Mr. Mushtaq Pirzada Vice Chairman Mrs. Samina Islam General Secretary Mr. Abbas Khan Finance Secretary Mrs. Naseera Bokhari Joint Secretary Dr. Shireen Zaffarullah Member Dr. Waseem Bano Member Mr. Jawaid Tariq Member Mr. Raza Toor Member Mrs. Khalil Ramdey Member Dr. Tayyaba Nasreen Member Eng. Arif Toor Member Mr. Razi-u-Din Member Mr. Abdul Rasheed Member (C) Mr. M. Asghar Member(C) Mrs. Afshan Jabeen Member (C) Mrs. Shafqat Saleem Member (C) AUDIT COMMITTEE Dr. Waseem Bano Mr. Raza Toor, ACA Mr. Abbas Khan, FCA EXECUTIVE COMMITTEE Dr. Shireen Zaffarullah Dr. Waseem Bano Mrs. Samina Islam Mr. Abbas Khan Mrs. Farida Tariq *Mrs. Farida Tariq, CHIEF EXECUTIVE OFFICER

SUSTAINABLE ORGANISATION A BALANCED APPROACH TOWARDS SUSTAINABLE BORROWER SUSTAINABLE ORGANISATION A BALANCED APPROACH TOWARDS ISLAMIC MICRO FINANCE

THREE INGREDIENTS TO ENTERPRISE DEVELOPMENT ISLAMIC MICROFINANCE BUSINESS DEVELOPMENT SERVICES RIGHT ADVOCACY SUSTAINABLE BORROWER → SUSTAINABLE ORGANISATION

Organization Background Started up in 1992 with Health & Education Projects Working in Microfinance with an Islamic Approach Since 1999 Consultation with Scholars in Masjid e Ibrahim Lahore in 2002 Product/Asset based approach since day ONE Consultation with Mufti Iftikhar Baig in 2006 Development of Islamic Model, 2008

Vision 2010 2009 Till Date Rs.1,000,000,000 30 Branch Offices Punjab 1999 & 2000 Rs. 658,000 1 Branch office 1 District 2001 & 2002 Rs. 1,753,500 1 Branch Office 1 District` 2003 & 2004 Rs.12,583,000 2 Branch Offices 2005 & 2006 Rs.122,844,000 8 Branch Offices 2007 & 2008 Rs.212,220,000 14 Branch Offices 3 Districts 2009 Till Date Rs. 398,561,329 20 Branch Offices 5 Districts Rs. 19,941,000 (Islamic 8 Branches) Vision 2010 Rs.1,000,000,000 30 Branch Offices Punjab Opening of Islamic Branches Development of Islamic Manuals Review of Procedures by Shariah Consultant Enterprise Development Facility Districts Being Served: Lahore Sheikhupura Gujranwala Faisalabad Nankana Sb

Financial Highlights 2009 2008 2007 Total Assets 342,036,181 241,635,322 187,131,312 Gross Loan Portfolio 145,908,619 116,087,060 106,087,220 Disbursements 105,916,028 113,951,000 98,269,000 Total No. of Clients Served 16,750 13,749 10,025 Operational Self Sufficiency 88.75% 87.6% 89.78% Total Expense/ Assets 12.90 22.86 22.20

Islamic Modes Chosen by CWCD Trade Based Mode Murabaha Sala’m Istisna Rental Based Mode Ijara (Not Currently in Practise) Diminishing Musharaka

Instant Sale on Deferred Payment TRADE BASED MURABAHA Murabaha has been derived from the concept of “Bai - Mu’ajjal” which is “Instant Sale” Instant Sale on Deferred Payment

Murabaha Vs Interest Bearing Loans Murabaha Transaction is always asset backed. Asset backing is not prerequisite for Interest bearing loans. It is fixed price contract. Price can not be increased in case of default. Interest is charged on daily basis from the Customer. It is purely sale and purchase transaction. It is lending of money and charging of interest. Relationship between Bank and Customer is Seller and Buyer. Relationship between Bank and Customer is Creditor and Debtor.

Pays on Deferred (Installments) Basis MURABAHA Buys Product Sells Product at Purchase Price Plus Profit Margin Pays Purchase Price Pays on Deferred (Installments) Basis CUSTOMER VENDOR

TRADE BASED Sala’m Sala’m was permitted to facilitate the poor farmers and Traders who needed money to cultivate their crops or buy items in overseas/foreign lands in order to sell them afterwards.

Sal`m Advance Payment against Deferred sale PAYS PURCHASE PRICE OF GOODS BEFORE MANUFACTURING/FARMING MANUFACTURER/FARMER DELIVER GOODS AFTER MANUFACTURING/FARMING SELL GOODS AT PROFIT THIRD PARTY / OPEN MARKET

TRADE BASED Istisna It is an order to the producer or manufacturer to produce/manufacture a specific commodity for the purchaser. Istisna is also a particular kind of sale which is executed before the Asset come in to existence.

ISTISNA PAYS PARTIAL PURCHASE PRICE OF GOODS alongside Production (Progressively) MANUFACTURER DELIVER GOODS AFTER COMPLETION SELL GOODS AT PROFIT THIRD PARTY / OPEN MARKET

Diminishing Musharaka Rental Based Diminishing Musharaka Financier and his client participate either in the joint ownership of a property or an equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units and it is understood that the client will purchase the units of the share of the financier one by one periodically, thus increasing his own share till all the units of the financier are purchased by him so as to make him the sole owner of the property, or the commercial enterprise, as the case may be. The client pays rent for the portion of asset used by the client, owned by the financer incase of joint ownership of property or equipment

Diminishing Musharaka Client Purchases CWCD Ownership & pays Rental on Remaining CWCD Ownership VENDOR Joint Purchase of Asset Asset Purchased is Insured through Takaful CUSTOMER

School Construction/Rennovation Up to Rs. 300,000 (Murabaha/Istisna) Upper Cap – Rs. 300,000 per case Rate is negotiated with the client Done under Islamic Mode of Microfinance Murabaha Istisna(Pipeline) Project has been completed within 2 months, and demand is coming from other enterprises for similar facility

Financial Highlights For Islamic Microfinance Apr 2009 – Oct 2009 Total No. of Clients till Date 391 Average Facility Size 51,000 Total Amount of Facility Procured 19,941,000 Total Number of Branches 8

Challenges Faced in Islamic Microfinance Sector Sources of FUND The funds available are not in Islamic Mode and hence the Organization can never become completely Islamic Increase in Cost of Transaction Understandability of Islamic Finance Availability of trained Human Resource

CWCD ISLAMIC MICROFINANCE TRAINING WING Training Opportunities on Procedures of Islamic Microfinance, by the experienced Trainers of CWCD Low cost training for the actual working in Shariah Complaint Microfinance Interactive Sessions with Shariah Advisor

Future Plans Expansion of Islamic Microfinance within Punjab Pre testing and Implementation of Musharaka & Mudaraba Research & Development of new Islamic Microfinance Products

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