Citigroup, Inc (NYSE: C) will push the idea of creating Shariah-compliant microfinance banks for the needs of millions of Muslims, who have previously been excluded from micro-finance because of Islam’s prohibition on paying interest, said a senior official on Monday.
“There are large microfinance banks in Indonesia, Bangladesh, Pakistan, Morocco, Egypt and India where the strength of the Muslim population is greater. But interestingly none of them are Shariah-compliant,” said Global Director Citi Microfinance Robert A Annibale.
“If something has become an impediment between the people and microfinance banks, it should be addressed,” he said. “There are some industry people who fear that business will be politicised, but that should not be a matter of worry.”
Pakistan has seen substantial growth in its microfinance industry during the last few years, he said. “Relatively, when you look at the number of un-banked people in the country, the 1.9 million borrowers of microfinance banks, looks impressive.” Annibale added that microfinance banks are not facing much of a funding problem, but raising enough equity to meet regulatory requirements. “The real task is the scale — the level of outreach.”
He added that microfinance banks could work with other organizations such as post offices, groceries and gas stations to provide a range of banking services to the poor. “This way they save a lot of money in terms of infrastructure costs.”
