Also called Qard-al-hasana , a special form of loan offered by Islamic financing institutions disbursed in specific welfare sector at zero or low cost with no urgency for repayment.
Published in Chapter:
Islamic Financial Inclusion: An Alternative Approach to Reach the Unbanked of Bangladesh
S. M. Sohrab Uddin (University of Chittagong, Bangladesh), Mohammad Zoynul Abedin (Dalian Maritime University, China & Hajee Mohammad Danesh Science and Technology University, Bangladesh), and Nahid Afroz (Credit Rating Agency of Bangladesh, Bangladesh)
Copyright: © 2020
|Pages: 19
DOI: 10.4018/978-1-7998-1611-9.ch009
Abstract
Financial Inclusion (FI), a global concern of this decade, has been accepted by development agencies, governments, and policymakers as one of the pre-eminent ways to eradicate worldwide poverty and income inequality. Consequently, authorities are looking for possible ways to include the unbanked in formal financial chain. Islamic finance, specifically Islamic banking, with its welfare-oriented principles and unique products, has been able to capture the attention of policy makers. Moreover, a major portion of the Muslim population still exclude themselves from the formal financial chain due to religious prohibition of interest-based transactions for whom Islamic finance is the only way to inclusion. Bangladesh, one of the major Muslim countries in the world, is still to bring one-fourth of its total population under formal financial chain. At this backdrop, this chapter examines the empirical contribution of Islamic banking sector in financial inclusion condition as well as development scenario of Bangladesh.