Aamir A Rehman
Senior Advisor on Islamic Finance, UNDP
The term ‘Islamic Social Finance’ refers to modes of finance that are rooted in Islamic ethics and intended for social benefit. These include Zakat (almsgiving), Waqf (endowments), Sadaqa (charity) as well as Qard Hasan (interest-free loans).
When one defines ‘Islamic finance’, it is vitally important that Islamic social finance be included. Doing so achieves three crucial benefits. First, it expands the sector’s scale: the Islamic Development Bank Group (IsDB) estimates the potential of Zakat alone to be as much as US$1 trillion per year. The value of endowment assets — which include countless landmarks such as the Taj Mahal — likely far exceeds the US$2.5 trillion assets of the commercial Islamic finance sector.
Second, social finance is far more inclusive and widely-adopted. In Egypt, for example, the market share of Islamic banking is 9 percent, as per the Islamic Financial…
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