Alliance Islamic Bank has launched Malaysia’s first book on zakat microfinancing, which showcases the productive distribution of zakat funds as microfinancing to empower asnaf (underprivileged) micro-entrepreneurs.
According to the bank, the book titled “Zakat and Microfinance” was borne out of the objective of promoting equitable development and financial inclusion of all categories of entrepreneurs. The utilisation of zakat funds for microfinancing to empower communities and progress asnaf micro-entrepreneurs out of poverty through business is a breakthrough concept. It pioneers Malaysia’s first social financing model that utilises zakat for microfinancing and is aligned with Bank Negara Malaysia’s Value-Based Intermediation (VBI) agenda, which promotes a socio and eco-centric banking model in furtherance of the intended outcomes of Shariah.
Alliance Islamic Bank said it consulted with various organisations and committees to obtain input on the permissibility of productively distributing zakat funds as microfinancing to asnaf micro-entrepreneurs. The extensive research was conducted in collaboration with subject-matter experts, Islamic Studies researchers specialising in social financing from Universiti Kebangsaan Malaysia and Pusat Pungutan Zakat – Majlis Agama Islam Wilayah Persekutuan.
The book discusses the principles of distributing zakat fund to asnaf micro-entrepreneurs as qard (repayment without profit). In addition to the concept of social microfinancing based on Shariah principles, the book outlines evidence and best practices shared by scholars, alongside a collection of legal and philosophical views.
