Search results

The purpose of this paper is to understand interest-free microfinance practices in India, identify issues and recommend possible solutions.

To achieve the proposed objectives, Bait-un-Nasr (BuN) Urban Cooperative Credit Society, located in Mumbai, India, is considered for the case study. The study is based on both primary and secondary data. The primary data are collected through questionnaires and secondary data from various sources. Performance of the institution is assessed in terms of growth and sustainability indicators.

It is found that BuN has been successful in providing interest-free microfinance services in India. A few operational issues have been highlighted and possible solutions are recommended. Moreover, it is found that in comparison to the microfinance industry standards, the performance of BuN has been lower.

BuN is evaluated from only growth and sustainability aspects and not from the aspect of the socio-economic impacts of its services on the lives of customers.

This study would become a documented source of interest-free microfinance practices in India. Moreover, the recommendations provided, if implemented, would help BuN in further growth and development.

This study would help create awareness in the society about the practices of interest-free microfinance.

This paper highlights the interest-free microfinance practices in India that have not received the needed attention. The paper also attempts to identify key issues pertaining to interest-free microfinance with possible solutions.

The purpose of this paper is to study the concept of purging and present a comparative study of the existing purging methodologies prevailing in the market with a view to evolving a more effective method of capturing the entire impure income to be purged.

To illustrate the present discussion, a case study of purging based on numerical examples has been included. The argument has also been supported with empirical data related to the universe of Sharīʿah-compliant stocks listed on Indian stock exchanges.

During the study, it was found that the existing purging methodologies of calculating impure income to be purged have conceptual and practical shortcomings.

The scope of the current research is limited to calculation of impure income which accrues on account of Sharīʿah non-compliant investments directly or indirectly. It does not try to quantify the benefit which may be imputed in the form of capital gains made in trading of the investee company shares due to higher market value of the shares as a result of the impure income earned by the investee company. The paper has focused on identifying and calculating the impure income on account of interest. Impure income earned from specific Sharīʿah non-compliant products or services has not been considered directly. The reason for this is that companies dealing in such products or services are generally excluded at the business screening stage itself. In the case of those companies which derive a relatively small proportion of their total income from such activities and pass the business screening stage, the quantum of the impure income is not generally reported separately in company accounts.

The result of adopting the proposed methodology will lead to complete purging of impure income (to the extent that is possible under present Company Law and stock exchange reporting regulations). Implementation of the proposed method requires a proper understanding of the working of listed companies and either a sound mathematical background or access to a software application to calculate the impure income to be purged.

The current paper is original and based on the authors’ personal understanding and experience of providing Sharīʿah consultancy services related to Sharīʿah-compliant investments.

This paper aims to critically analyse the application of present value (PV) practised in the concept of time value of money (TVM) from the perspective of maqāṣid al-Sharī‘ah (objective of Islamic law) explained by Ibn ‘Ashur. The analysis is important as this concept has been adopted in the practice of Islamic accounting measurement.

This paper uses qualitative research approach. The authors first review literature related to TVM in Islamic perspective to understand the extent to which the scholarly articles have been discussing this topic. Furthermore, the authors conduct face-to-face interviews with the experts to comprehend the means of TVM application in the recent Islamic accounting practices. The tawhid (monotheistic) paradigm is further used with special reference to the concept of maqāṣid al-Sharī‘ah of Ibn ‘Ashur to critically analyse the practice of TVM in Islamic accounting measurement.

This study identifies the opposing views among the experts on the topic of TVM from the Islamic perspective. That is, the experts’ opinion on this issue can be classified into two. Firstly, a view that rejects TVM and proposes the concept of economic value of time. Secondly, an opinion that recognises TVM with the basis of bay’ al-mu’ajjal (deferred sale). This paper further critically analyses these two opposing opinions. The discussion is established based on the theory of maqāṣid al-Sharī‘ah as explained by Ibn ‘Ashur and the excerpts from interviewing the experts. This work draws a conclusion that such PV-based measurement of TVM does not meet the Islamic principles explained in the theory of Ibn ‘Ashur’s maqāṣid al-Sharī‘ah. Thus, the practice of PV measurement in Islamic accounting is debatable.

This study does not establish a positivism discussion. It is thus the generalisation of this work is not applicable to the Islamic perspective in general. Rather, it is limited to Ibn ‘Ashur’s maqāṣid al-Sharī‘ah.

An analysis of PV measurement adoption in Islamic accounting from maqāṣid al-Sharī‘ah perspective is practically important to raise the awareness that such practice is debatable in Islamic principles. That is, such debate opens new arena for academics, industry professionals and other related stakeholders to further discuss an ideal practice of Islamic accounting.

This paper is among the pioneers that analyses the concept of TVM, in particular relation to PV measurement in Islamic accounting practice from the perspective of Ibn ‘Ashur’s maqāṣid al-Sharī‘ah.