Islam, being a deen (a complete way of life) and not just a religion, provides answers to all the complexities and problems that the humanity has faced, faces and will face. One of the biggest challenges before the humanity is the issue of wealth generation and its distribution. The present capitalist system, which is primarily an interest-based system, has serious drawbacks as it makes the rich richer and the poor poorer. In contrast, Islam presents an economic system which is interest-free and puts the money in such a circulation that unlike the capitalist system, money does not remain in the hands of the few.
Sahulat Microfinance Society, which is striving to popularise interest-free microfinance, brings out “SAHULAT: A Journal of Interest Free Micro Finance,” a bi-annual journal to promote and disseminate the interest-free finance as promulgated by Islam. The journal contains articles by many of the renowned Islamic economists namely Dr. Nejatullah Siddiqi, Dr. M. Umer Chapra, etc., presenting their views and mechanisms so as to make at least the microfinance interest-free. The core discussion in economics is about wealth generation and hence money must remain in circulation and not be stashed. It so happens today that the poor do not get loan or if they get they have to pay exorbitant rates of interests. Hence the inequalities and poverty remain the same even if the poor excel or succeed in their businesses. It is needless to say as to what will happen to the debtor when the business fails; suicide as often the poor could not even maintain the subsistence level.
The journal mentions the success stories of the interest-free microfinance and records the experience of International Fund for Agricultural Development (IFAD) where the loan given to the poor was quickly repaid by the high earnings of the farmers. The success of Grameen Bank (GB) in Bangladesh is also commendable as the repayment rate since its inception is 99 per cent. The journal also mentions zakah and awqaf as interest-free instruments of microfinance and says that by employing Islamic Microfinance a mustahiq (the one who receives zakah) can be transformed into a muzakki (the one who gives zakah) within a definite time frame.
Though the journal lays out a good record of the immense help that it did to the poor, the needy and the destitute in making them stand on their feet yet microfinance would not be able to stem the rot which is there at the top level, where all the transactions take place on the principles of capitalist system. This can further be understood from the statement of D Subbarao, RBI Governor, that Islamic banking is not possible under the existing rules. He further said, “We appreciate the objective (Islamic Finance), but there are some legal problems.”