Abstract
There is no doubt that through endorsing different Islamic modes of financing, Islamic
banks are showing the right way to people to free themselves from the menace of interest.
However, it is equally necessary for Islamic banks to invest on poor members of the
society. A keen observation of Islamic banks reveal that their greatest shortcoming is
their inability and lack of interest in financing as well as investing on poor individuals of
the society. The term ‘Islamic banking’ not only reflects the transitional modes of
financing but also highlights the ideal modes of financing. Welfare of underprivileged
members of the society is an important goal of the Shari‘ah. Dr. Muhammad Younus
founded Grameen Bank with the aim of providing capital to the underprivileged segment
of the society, giving two dollars each, which also earned him a Noble prize.
Unfortunately, a banker with an interest-based background felt the dire necessity of
providing loans to the poor, regardless of the fact that this loan was interest-based and
prohibited by the Shari‘ah. His efforts were also appreciated worldwide. On the contrary,
Islamic banks promoting Islamic financing still hesitate to invest on poor people,
accusing them of default. Historically, this is an erroneous assumption, as poor people
have the lowest level of default, while rich industrialists, politicians etc. usually have the
highest level of default. So, it is the need of the hour to initiate microfinance in Islamic
banks and its immediate launch should be closer to the goals of the Shari‘ah. This article
discusses the potential of microfinance and also proposes practical methods of
microfinance, especially the methods that focus upon partnership. If Islamic banks adopt
these modes of microfinance they can speedily grow in this field as well.
Salman Ahmad Khan, Salman Ahmad Khan. (2018) Partnership Based Microfinance in Islamic Banks: Need, Application and Commandments in Modern Age, Journal of Islamic Thought and Civilization, Volume VIII, Issue 1.
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