Poverty is not an individual problem; it is a failure of the economic system because every company or a financial institution should take part in the social responsibility, said Nobel Prize winner and Bangladesh’s Grameen Bank founder Muhammad Yunus.
“When it comes to sub-prime, you can’t get more sub-prime than our customers,” Yunus said at the International Islamic Finance Forum (IIFF) in Dubai yesterday. “When every one co-operates and plays his role in the community, the whole community will develop and grow, not the rich only.”
Grameen Bank offers interest-free loans of $15 (Dh55) with no time limit for repayment to the poor. Yunus also highlighted his philosophy of the bank that rejects the rich and seeks the poor to become its customers.
The Grameen Bank has issued more than $5.1 billion in loans to 5.3 million borrowers, maintaining a hugely successful repayment rate of 99 per cent. The bank, whose 7.5 million customers are also its shareholders, is a model that has inspired similar efforts across five continents.
Yunus said: “While the concept of providing credit to the poor as a tool of poverty reduction is not unique, the creation of an institution was needed to lend to those who had nothing. This is part of the very core of Islamic belief in terms of finance.”
He explained ways of introducing Islamic financial products in the micro-finance industry to bridge the gap between the rich and the poor and create areas of cooperation in fighting poverty with micro-finance tools.
Expectations were high among participants about the ability of Islamic banks to capture a sizeable share of business from conventional banks in the coming years as interest in Islamic financial products looks promising.
The forum also addressed a wide range of topics including the merging of the US, Singapore and Hong Kong as new hubs for Islamic finance and their impact on traditional financial centres.
Discussions also touched on the Halal industry and financial products as well as the management of Shariah compliant assets.
Addressing the shortage of Shariah scholars, panelists called for more studies on Islamic finance as well as the need for common perspective of essential rules of Islamic finance to integrate different Shariah compliant financial products.
Muhammad Yunus calls for greater social responsibility