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Ideas for Financial Inclusion of Indian Muslims Discussed at Harvard

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By Kashif-ul-Huda
Cambridge, Massachusetts:
A three-day 11th Harvard University Forum on Islamic Finance was held last month on the topic of Takaful and Alternative Cooperative Finance: Challenges and Opportunities. On the first day, two papers presented in the Forum discussed ways for financial inclusion of Indian Muslims. Abdul Qadir Buhari who is the Chairman of B.S. Abdur Rahman University in Chennai talked about low deposit to credit ratio of Muslims (47% vs 74% national average) as quoted in Sachar Committee Report. Buhari was presenting a paper on “Achieving Financial Inclusion of Muslim Minorities Through Alternative Shari’a-Based Cooperative Finance Models,” co-authored with Blake Gould of Marquam Capital of Oregan and Saif Ahmed of Infinity Consultants of Bangalore. In their presentation, Buhari and Ahmed talked about models that they have developed that is shariah-compliant and works within the Indian regulations that does not allow for Islamic banking. They talked about three models under the Joint Liability Group (JLG) structure: Mututal Benefit Trust Model, Cooperative Credit Society Model, and Direct Disbursement Model. When they analyzed the three models under Takaful Principles, they found that first and the last model meets all the criteria. In another session, the Aligarh Muslim University team presented a paper on “Micro-Takaful in India: a Path towards Financial Inclusion and Sustainable Development.” The paper was authored by Mohammad Faisal, Asif Akhtar, and Asad Rehman. They proposed a working model for micro-takaful or insurance for members of low income group. They said people of this group are not served by any financial company now and a product designed to help them can be a tool for their financial inclusion. This product is not just for Muslims. They also talked about ways that this model can work within the confines of the existing financial regulation in India.