Story of Interest Free Brotherhood
I am pasting some excerpts from the Article by Fakhra Hassan (The NGO World) which was written for the Pakistani Non - Profit organization called "AKHUWAT" which means Brotherhood.
Non-Government Organizations (NGOs) and various Rural Support Programmes (RSPs) have been major players in the micro-finance sector in Pakistan, which, according to the State Bank of Pakistan (SBP) is still a relatively new concept compared to other developing countries, NGOs and RSPs in micro-finance have been involved in poverty alleviation of hundreds of thousand poor households across the country since the early 1980s.
Lahore-based Akhuwat (Brotherhood) is one such NGO in the microfinance sector that has been providing interest-free loans to the poor and poorest of the poor in 14 cities across Punjab and Sindh. Founded in 2001 with a donation of PKR 10,000 ($164) that was lent to a poor women, Akhuwat has 20 branches serving the needs of the poor at the grassroots level. Since six years of its conception, the organization has disbursed PKR 240 million ($ million). Akhuwat’s first branch and head-office is located in Township, Lahore and runs entirely on donations. The first loan product offered by the organization was enterprise of family loan which was meant to help poor develop business.
The loan applicant, however, has to become a member of Akhuwat in order to qualify to receive the loan. That requires a membership fee equivalent to five per cent of the loan amount applied for. In addition, the applicant also has to pay one per cent of the loan amount to buy insurance, which covers the risk of death or getting handicapped. In the event of death, the family is provided with PKR 1,000 ($16) for three months to suffice for their basic expenditure. However, loans amounting to less than PKR 4,000 ($66) are exempt from membership fee and insurance charges.
The loan recovery rate so far has been 100 per cent, which owes to effective screening of applicants, thorough screening of applicants, thorough appraisal, social guidance and regular monitoring.
“We, at Akhuwat, believe that utilization of the mosque or church is crucial for human development purposes as well as to promote socio-economic development of the poor”, says Saqib. By using the existing infrastructure of mosques and churches would also help Akhuwat to minimize its operational costs on delivery of funds from donations.
“The current aim is to eventually eliminate group lending completely and to be largely led by individual loans. Individuals have greater potential as entrepreneurs, a reality which should be exploited”, he says.
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Read full article at http://www.akhuwat.org.pk/index.php?option=com_content&view=article&id=6...
This is what every poor or needy requires. Interest is a curse, when you give loans on interest, it would not help others. What they are doing, giving loans interest free. Charity or temporary help wouldn't solve the economic conditions of any family, only sustainable source of income does this.
Join them at www.akhuwat.org.pk
