A Framework for Regulating Islamic Microfinance Institutions
Abdul Ghafar Ismail ()
No 1435-5, Policy Papers from The Islamic Research and Teaching Institute (IRTI)
Regulation is crucial for many reasons. More important than that is to produce an effective regulatory framework. In this paper, we will find that the first step in this framework is the philosophical foundation of Islamic microfinance institution’s establishment that is formulated in their operations and incentives. Second, the policy issues related to regulations need to be addressed, among others: Islamic microfinance institution activities and Islamic microfinance institution-philanthropy links; effectiveness and sustainability; shariah based business model; who are the regulators; and ownership. Finally, several guidelines will be introduced to produce environmentally effective regulations, among others are the guideline on: the shariah advisory council, corporate governance, group lending policy, loan loss financing, minimum capital and micro-takaful scheme.
Keywords: regulation policy; Islamic microfinance institutions; regulatory philosophy; shariah (search for similar items in EconPapers)
Pages: 14 pages
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