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First Islamic Microfinance in Pakistan 1
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FARZ METHODOLOGY
First Islamic Microfinance in Pakistan 3
Vision“To bring social change through
poverty alleviation by improving
productivity and capacity of clients
and staff”
4
MissionEmpowering the poor
through innovative products and diverse
business opportunities, by integrating social
performance focused microfinance with collaborative community
health and education partnerships.
First Islamic Microfinance in Pakistan 5
FARZ METHODOLOGYGraphically Concept
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Step-2 Murabaha
Offe
r fo
r Mem
bers
hip
thro
ugh
Mur
abah
a
Our Target Household
Intend to do
Membership done via Female
Request for Mem
bership through Murabaha
Step-1 Takaful
HouseholdBusiness
Step-1
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Member
Business Education
Household
Step-3
BusinessBusiness
Profit generated from Business
Meet Business Expanses
Meet Household Expanses
Reinvestment in Business
Installment of Farz Committee
Step-2
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Farz Committee Pool
FF Provides facility to client (See Farz Committee)
Member
Household
BusinessBusiness
Profit generated from Business
Installment of Farz Committee
Mem
ber gives installm
ent to FF
Step-3
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Process of Farz Committee
Committee Pool and total Collection= PKR: 2,200
10 Members of Community from One Cluster
10 Members of Community from One Cluster
Farz Foundation as 1 MemberFarz Foundation as 1 Member
Share PKR:200In Committee Pool
Each Member
Share PKR:200
In Committee
Pool
Committee Group MemberCommittee Group Member
From every 3rd to 11th,member gets the total collection2,200 through a monthly lucky Draw . (1st and 2nd collection go to FF & group organizer)
Step-3-a
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Process of Farz Committee
Members get PKR: 2,440 after one Year or Monthly PKR:20
Investment Pool of Farz Foundation (FF & Community are partners in MURABAHA Business)
Members do partnership with FF
PK
R: 2,200 +
220 in one year
Committee Pool and Total Collection= PKR: 2,200
Step-3-b
To meet immediate Needs
Build asset
Reinvest in Core Business
FF generates other source of Income
for their Client
Committee Group MemberCommittee Group Member
Option
PK
R: 2
,20
0
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Household
Health Care Awareness
FF Provides health care awareness to clients
Step-4
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Household
Future Protection Program
FF gives awarness to clients about their children’s education through “Children Education Awareness Program”
Step-5
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FARZ METHODOLOGY
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TARGET MARKET
Business & Environmental education
Health
Financial Service
An Integrated Approach
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TARGET MARKET
Upper
Middle
Lower
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LowerNon-Poor
• Large Murabaha + Takaful + Committee (participatory saving) +Health Care Awareness +Business & Environmental Education
Poor
• Medium Murabaha +Takaful + Committee participatory saving) +Health Care Awareness +Business & Environmental Education
Moderately Poor
• Small Murabaha + Takaful + Committee (participatory saving) +Health Care Awareness +Business & Environmental Education
Poorest of the poor
• Zakah or charity in kind or in shape of income generating tools) +Health Care Awareness +Business & Environmental Education
Product Packages for Each Market
First Islamic Microfinance in Pakistan 17
Murabaha
Product Trade Size
Murabaha (Small) PKR: 5,000 to 30,000
Murabaha (Medium) PKR: 31,000 to 80,000
Murabaha (Large) PKR: 81,000 to 150,000
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MurabahaTarget for One Social Center (Branch)
Product Target
Murabaha (Small) 1,080 Clients
Murabaha (Medium) 180 Client
Murabaha (Large) 0
Year 1st
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Clients Graduation Strategy
1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year 9th year 10th year0
200
400
600
800
1000
1200
1080
734
499
340
231
157
10773
49 34
180
468
553536
473
396
319
251
194
148
0
58
207
384
556
707
834
936
1017
1079
Murabaha Small Murabaha MediumMurabaha Large
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Identification of Area for Operation To allocate the Area for Social Center (Branch) To allocate the Potential working areas for social center Product need assessment.
Potential businesses. Cash flow of different businesses. Size of micro trade.
First Islamic Microfinance in Pakistan 21
Staff Hiring
Add for staff hiring in local News paper. Collection of CVs as per given date. Short listing of CVs and finalize prospective
Candidates for interview. Sending calling letters to all selected interviewees.Conduct 1st interview
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Capacity Building of Staff To deliver the orientation of FARZ FOUNDATION to final candidates for jobs. To deliver three days Step-in-Training to all Selected staff.(In house)
Islamic banking & finance . Conventional microfinance Farz Methodology Basic Selection criteria of FARZ FOUNDATION Area survey Effective Mobilization skills Clients appraisal training Cluster formation steps Conduct of community meetings Customer relationship management Social performance management Delinquency management Monitoring
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Three days on the job training to the staff. Basic Selection criteria of FARZ FOUNDATION Area survey Effective Mobilization skills Clients appraisal training Cluster formation steps Conduct of community meetings Customer relationship management Social performance management Monitoring Islamic banking & finance . Conventional microfinance Farz Methodology
Interview and selection for one month internship Selection for 11 month on a contract. After 11 month, contract extension / permanent
employee.
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Social Center (Branch) Opening
Social Center Opening Ceremony Mobilization
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Kicking of Operations
Social Manager
Accountant
SO Small
Murabaha
SO Small
Murabaha
SO Small
Murabaha
SO Medium
Murabaha
Office Boy
Branch Structure
First Islamic Microfinance in Pakistan 26
Cluster Manager
Group Leader
Member
Member
MemberMe
mber
Group Leader
Member
Member
MemberMe
mber
Group Leader
Member
Member
MemberMe
mber
Cluster structure
CLUSTER COMMITTEE
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Delivery ProcessStep 1 • MOBILIZATION
Step 2 • COMMUNITY MEETING CONDUCTED BY SOCIAL OFFICER (SO)
Step 3 • TO FINALIZE THE CLUSTER MANAGER AND GROUP LEADERS
Step 4 • HOME SCREENING
Step 5 • BUSINESS SCREENING
Step 6 • FINAL FORMATION MEETING
Step 7 • SALE AGREEMENT AND DELIVERY OF ASSET & STOCK
First Islamic Microfinance in Pakistan 28
MOBILIZATION
Identification of potential clients within above mention target market.
Identification of the potential businesses.
First Islamic Microfinance in Pakistan 30
COMMUNITY MEETING
What is the eligibility criteria for taking our product Systems and procedures for taking our product. Your and our responsibilities for managing social
performance at cluster level. Introduction of program.
First Islamic Microfinance in Pakistan 31
HOME SCREENING + Know Your Client & Application Form Filling
Verification of Client’s according to the member selection Criteria
Information Collection (Home Related)
First Islamic Microfinance in Pakistan 32
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First Islamic Microfinance in Pakistan 34
First Islamic Microfinance in Pakistan 35
First Islamic Microfinance in Pakistan 36
BUSINESS SCREENING + Know Your Client & Application Form Filling
Verification of Client’s Business according to the member selection Criteria
Financial Analysis Repayment Capacity Business Information Collection
First Islamic Microfinance in Pakistan 37
First Islamic Microfinance in Pakistan 38
First Islamic Microfinance in Pakistan 39
First Islamic Microfinance in Pakistan 40
First Islamic Microfinance in Pakistan 41
FINAL FORMATION MEETING Approval of Trade (Murabaha)
Briefing to the Clients about Sale, purchase, price, cost, profit, sale agreement, System, Procedures and repayments Schedule
First Islamic Microfinance in Pakistan 42
First Islamic Microfinance in Pakistan 43
First Islamic Microfinance in Pakistan 44
ASSET/STOCK PURCHASING
Selection of standardize Venders/Whole Sellers To Purchasing of Asset / Stock as per demand of
Client’s Business
First Islamic Microfinance in Pakistan 45
First Islamic Microfinance in Pakistan 46
SALE AGREEMENT and DELIVERY OF ASSET/STOCK
Transparency of Sale Agreement Transfer of Ownership
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MONITORING & EVALUATION
First Islamic Microfinance in Pakistan 50
Daily, weekly, monthly, quarterly and six monthly reports system.
Field visits of bottom to top Management. Fortnightly Meetings with 100% Clients. Social Performance Management.
MONITORING & EVALUATION
First Islamic Microfinance in Pakistan 51
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First Islamic Microfinance in Pakistan 53
Asset Building
First Islamic Microfinance in Pakistan 54
Farz CommitteeHeads Features
Committee Size Min= PKR:100 and Max=unlimited
Period of Committee Cycle 11 Month
Participants of Committee in Each Group 10 Members + 1 Farz Foundation=11
Number of Committee Groups under One Cluster
Min=1 and Max=3
Frequency of Committee Installment Fortnightly
Frequency of Committee Draw (lucky draw)
Every Month
First Islamic Microfinance in Pakistan 55
Committee Group
First Islamic Microfinance in Pakistan 56
Committee Pool and Total Collection= PKR: 2,200
10 Members of Community from One Cluster
10 Members of Community from One Cluster
Farz Foundation as a MemberFarz Foundation as a Member
Share PKR:200In Committee Pool
Each Member
Share PKR:200
In Committee
Pool
Farz Foundation as Committee Manager (FF)
Farz Foundation as Committee Manager (FF)
1st Total Collection of Committee Pool goes to Farz Foundation
1st Month of Committee
First Islamic Microfinance in Pakistan 57
Members become partner of FF
PK
R: 2,200
PK
R: 2,200 +
220 in one year
Committee Pool and Total Collection= PKR: 2,200
Members get PKR: 2,440 after one Year or Monthly PKR:20
10 Members of Community from One Cluster
10 Members of Community from One Cluster
Farz Foundation as 1 MemberFarz Foundation as 1 Member
Share PKR:200In Committee Pool
Each Member
Share PKR:200
In Committee
Pool
Committee Group OrganizerCommittee Group Organizer
2nd month Total Collection of Committee Pool goes to Committee Group Organizer
Investment Pool of Farz Foundation (FF & Community are partner in MURABAHA Business)
2nd Month of Committee
First Islamic Microfinance in Pakistan 58
Members get PKR: 2,440 after one Year or Monthly PKR:20
Investment Pool of Farz Foundation (FF & Community are partner in MURABAHA Business)
Members do partnership with FF
PK
R: 2,200
PK
R: 2,200 +
220 in one year
Committee Pool and Total Collection= PKR: 2,200
10 Members of Community from One Cluster
10 Members of Community from One Cluster
Farz Foundation as 1 MemberFarz Foundation as 1 Member
Share PKR:200In Committee Pool
Each Member
Share PKR:200
In Committee
Pool
Committee Group MemberCommittee Group Member
3rd to 11th, every month Total Collection of Committee Pool goes to Committee Members through Lucky Draw
3rd to 11th Month of Committee
First Islamic Microfinance in Pakistan 59
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Health Care
First Islamic Microfinance in Pakistan 61
Health Care
Organizing Eye care Camps Health Awareness Program
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Future Protection
Program
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Future Protection Program Educational Support to Community children
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Entrepreneur Development
Program
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Clients Capacity Building Strategy
1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year 9th Year0
50
100
150
200
250
300
350346
235
160
109
74
50
3423
16
58
150
177172
151
127
102
80
62
Trained for Murabaha Medium
Trained for Murabaha Larg
First Islamic Microfinance in Pakistan 67