The Role of Islamic Microfinance in Poverty Alleviation: A Case of Esaar Microfinance Program of Helping Hand for Relief and Development (HHRD)-Pakistan

This theoretical study shows that Islamic microfinance has a significant role in poverty alleviation strategies. While conventional microfinance products have been successful in Muslim countries, Muslims/beneficiaries are not much satisfied with these products because of interest (Riba) which is prohibited in Islam. Although taking an impression of Islamic microfinance in Muslim countries, this Study commences a case of Esaar Microfinance program of HHRD, an Islamic microfinance Program operating in Pakistan. Critical financial analysis of Esaar Microfinance program shows that it is providing services for all the poor according to the three different classifications: Abject poor, below the poverty line, at the poverty line and Interest free loans, is operating through three different modes, i.e., Murabaha, Mudaraba, and Qard-e-Hasan. Islamic Microfinance can be used as a powerful tool to trim down the poverty of Muslims as well as other communities. It recommends that linkages of institution NGOs (Non Government Organization), NPOs (Non Profit Organization) and RSPs (Rural Support Programs) with the specialized resource mobilization institutions and capacity building centers will enhance the financial stability of organizations and will be supportive to achieve the targets of providing Islamic microfinance services to the poorest of the poor under the umbrella