Frequently Asked Questions
What is interest or Riba ? >>>
Interest or Riba literally means 'to grow; to increase.' Technically, it denotes the amount that a lender receives from a borrower at a fixed rate in excess of the principal amount. The word “Riba” is used in the Holy Quran 8 times. In 30:39,4:161,3:130, 2:276,2:278 and 3 times in 2:275.

The Quran says "Trade is like usury," but Allah hath permitted trade and forbidden usury…(Quran 2:275)

What philosophy HHRD upholds for Interest Free Microfinance ? >>>
HHRD upholds Islamic approach of microfinance which emphasizes on microenterprise development through financial and non-financial assistance adhering to principles of transparency, brotherhood and cooperation. At the same time, HHRD is committed to develop various microfinance products following Shariah norms and prohibitions

What are the approaches HHRD follows in providing Interest Free Microfinance ? >>>
HHRD currently follows the following three approaches of Islamic Microfinance:
  1. Qard Hasan providing cash to needy borrowers who will use for consumption/social needs and return the same amount in affordable installments.
  2. Murabaha is trade based and it implies a sale on ‘cost-plus’ basis mainly intended for women entrepreneurs graduated through Skills Development Centers and others.
  3. Mudarabah implies providing microfinance on resource sharing basis and distribution of profit on mutually agreed ratio signed through MoUs.
What is the structure and operational mechanism for IFMF ? >>>
At the policy level, IFMF receives consistent policy guidelines from a high level committee called Microfinance Committee comprising Br. Farrakh (Chairman HHRD), Br Irfan Khursheed (Executive Director,HH -US) Br Hafiz Saeed (Regional Director, Atlanta,USA), Br Fazal ur Rehman (CD, HHRD_Pak) and Dr Shabbir Hussain (MD, MEEP-Pak). MFC holds weekly meetings to review progress ,discuss issues and provide policy framework. IFMC operates at national level with its head office based in Islamabad supported with finance, admin, HR and It. IFMC Website/portal is developed and uploaded by a professional competent team based in USA supported by Pak team. MFOs and Implementing Facilitating NGOs form the basis of nationwide operational network at grass root level implementing QH, Murabah and Mudaraba.
When was HHRD’s Interest Free Microfinance started ? >>>
Followed by emergency relief and rehabilitation started since Earthquake 2005, HHRD initiated long term development program of Interest Free Microfinance (IFMF) , initially by providing Qard Hasan in EQ rural areas of district Mansehra , Batagram and Hatian Bala (AJK) .
What is the expansion strategy of HHRD’s Interest Free Microfinance ? >>>
As a follow up of International Islamic Microfinance organized by HHRD in mid 2009, HHRD launched its Microfinance and Economic Empowerment Program (MEEP) in June 2010 through QH, Murabah and Mudarabah in IDPs areas (Swat, Bunair, Dir and Malakand)

More recently IFMF expanded in the selected UCs of severely flood affected districts including Swat, Charsada, Nowshera, Mianwali, DG Khan, Shikarpur, Kashmor, Rajanpur, Jaffarabad , Jackobabad and Thatta.
What is the outreach of HHRD’s Interest Free Microfinance ? >>>
Microfinance in general has a market of 27 million borrowers as against current outreach of about two million borrowers in Pakistan. The number of borrowers exceeded 400 in December, 2010 and crossed 1300 active borrowers by the end of April, 2011. The journey of recycling loan portfolio of more than 25 million of Pak Rupees (equivalent to US $ 294,118) continues progressively as Sadaqa Jaria with nationwide horizontal expansion and vertical development through a branchless operational mechanism through Microfinance Facilitation Officers and community based organisations.
How is a potential Borrower identified by HHRD ? >>>
HHRD conducts socio-economic baseline survey in the target areas through a structured questionnaire which include : family size, education , sources of income, assets owned by the family and expenditure details and also past credit history if applicable. If the family's per capita income is not enough to meet per capita caloric requirement per day (which is the basis of poverty line official definition in Pakistan) , then the family falls below the poverty line. In this way we compile/analyze all the families surveyed and determine the potential beneficiaries for various mode of Islamic microfinance.
Who and how one can support IFMF program of HHRD ? >>>
Any individual, organization or group can support to IFMF provided they are convinced with Islamic values and the policy and program of IFMC . HHRD maintains transparent record of every transaction. Accounts are audited by chartered accountants on annual basis. Recently HHRD has been accredited by Pakistan Center for Philanthropy which is an independent organsiation given mandate by the Government of Pakistan. Donors accounts are maintained with reporting format as required by the respective donor. ICNA Relief and HH-USA are currently major donors for IFMC.

List and profile of potential loanees are available on website for sponsorship.
How is a potential borrower appraised by HHRD ? >>>
Based on baseline survey information, an appraisal is conducted on 5 Cs Principle: Character, Capacity, Capital, Collateral and Conditions. Accordingly, applications of potential borrowers are further assessed by HHRD field and head office staff. Social collateral plays prime role to ensure 100 percent recovery of loans.
How is HHRD implementing Microfinance Program in the field at national level ? >>>
HHRD follows “Branchless Banking approach” Under this approach HHRD has no branch office established rather every Microfinance Facilitation Officer (MFO) works from his home usually based in the UCs or program area. MFO is trained at head office in Islamabad and he is provided with computer and internet facility . Head office officials collect information and review program progress on weekly basis through sms, e-mails, phone calls etc. Weekly Conference calls are being planned and will be implemented soon.
How much are the loans? >>>
Loan size varies based on the nature of income generating activities or microenterprises. The average size of a loan is 250 USD. These tiny loans may change the destiny of millions of the people below the poverty line.
How is loan returned ? >>>
Repayment is made in easy installments as ascertained through a signed agreement based on ‘capacity to repay’ linked with income generated through the commercial activity supported through microfinance. Therefore the installments may be on monthly basis for loans given to scale up shops/stores or seasonal based like : agri-inputs for crops, rearing of calves/livestock.
What is the goal of IFMF and how does sustainability fits into these goals ? >>>
Micro Financial Institutions s have bright prospects world wide. With overall goal of increasing income of potential entrepreneurs, providing access to financial and non financial services, alleviation of poverty, the specific goals of IFMF are as under:
  1. To select target beneficiaries through community organizations or market committees who have potential of increasing income through microenterprises with input of microfinance
  2. To assess their viabilities of business/microenterprises in term profitability, acceptability in the local culture, and capacity to undertake such microenterprises
  3. To scale up existing income generating activities (IGAs) into microenterprises to generate higher income.
  4. To achieve operational and financial self sustainability. By and large it depends upon the outreach. The greater the outreach, more are these ratios attained by respective MFIs. Under IFMF, profit is shared on mutually agreed ratio among borrowers, local implementing partners and HHRD.
  5. "Age" of MFIs play vital role. Therefore, it should be one of the goal of MFI to move forward expanding towards maturity stage which is attained after 5 years of operations.
  6. Horizontal expansion and vertical development through products developments with innovation should be a consistent development objective of Islamic Microfinance complying with the Sharia principles.
  7. Poverty alleviation remains over riding goal of IFMF. Microfinance is one of the effective tool of poverty alleviation.

Success Stories

Amna Mushtaq, age 30 living with her husband, trying to move her family upward on the rung of socio-economic development. Her family suffered the calamity of land sliding due to earthquake 2005. The recent monsoon rains also caused damage to her house.
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Sir Injamis the only bread earner for the livelihood of his 07 member's family. In an accident he lost his one leg and arm Consequently he also lost his job. Despite of this tragedy, he has not lost his hope. With some help from friends, he started a small tuck shop in a room of his house.
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Telling the story and getting our message out. A network of public information officers, supported by other staff, sends material to HHRD Communications Group for processing and dissemination.
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