Islamic Micro-finance

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We launched the Islamic Microfinance Development Program (IMD) in 2017 as a new advisory service business line, and it has already proved its success by delivering two mandates in Azerbaijan for two different microfinance institutions (MFIs).

The IMD is designed to enhance and develop the Islamic finance capabilities of microfinance institutions in member countries.

It aims to maximize reach by appealing to a wide range of target clients (conventional and Islamic financial institutions) by providing:

Advisory services for microfinance institutions: To include how to develop shariah-compliant Microfinance products, establish institutional capacity (operations set-up, MIS, training etc) and enable

An Islamic microfinance environment (legal, regulations, authenticity).

Line of Finance to Islamic MFIs (IMFIs): To support the portfolio growth of those that are facing a shortage of financing; under an Investment Agency agreement between the ICD and the IMFI, the IMFI should enter into a sharia compliant financing agreement(s) with an eligible client.

Direct investment in an IMFIs equity: To develop strongly capitalized IMFIs with an ambitious development plan; this will demonstrate the industry’s profitability and encourage further private sector investment in IMFIs.

Structure an Islamic microfinance investment vehicle and create the first Islamic gateway microfinance investment vehicle (MIV): To pool and channel funds from different investors (DFIs, private equity) into IMIs. In 2017, we advised the Finoko Non-Banking Financial Institution and the FinDev Non-Banking Financial Institution on establishing Islamic microfinance windows and introducing new sharia compliant products in Azerbaijan.

Areas covered included legal, human resources, IT, accounting and marketing and communication support.