The literature supports that a traditional MFI has two basic objectives i.
Financial sustainability means that the MFI is able to meet its operating costs, its financial costs adjusted for inflation and costs incurred in growth. Finally, reliance on subsidies might alter a firms incentive structure in ways that could increase the likelihood of a negative event.
Unfortunately its clients are non rural. There are no independent officers and loans are disbursed and recovered in the mosque. Financial sustainability means that the MFI is able to meet its operating costs, its financial costs adjusted for inflation and costs incurred in growth. This ratio is desired to be decreasing over time. He concludes that Islamic MFIs can be both competitive with conventional MFIs in the region and meet the reported demand for religiously tailored financial services for lower income groups. To protect from withdrawal risks, the MFI can use takaful and profit-equalization reserves to give depositors competitive returns.
Journal of Small Business Management 45 1 , pp. In case of Akhuwat this ratio is also not unidirectional. Therefore, Islamic banks operating in the country must also extend their cooperation with Islamic microfinance institutions not only to assist them in improving their scale and performance efficiency but this could also be business area for them also. Akhuwat is dedicated to improving the lives of the poor; those who are financially abused, abandoned and disregarded by society.
The disbursement of loan in the form of Qraz-e-Hasan is mostly followed by guidance, support and empowerment to enhance capacity building of the poor. Financial sustainability means that the MFI is able to meet its operating costs, its financial costs adjusted for inflation and costs incurred in growth. It shows that Islamic microfinance providers still reach only , clients, one-third of them in Bangladesh alone. He maintains that it is essential to establish linkages among various institutions at micro, meso as well as at macro level for the growth of Islamic MF industry.