 With this, we start our conversation on Islamic microfinance. Islamic microfinance is assuming a lot of importance in different countries where Islamic banking and finance exist as a significant activity. In the wake of COVID-19, now there is growing emphasis on Islamic social finance. Islamic social finance has one component on the provision of Islamic microfinance and we would be going into these details in one module or a couple of modules to follow. But before that, let us look at microfinance itself. What is microfinance? Microfinance involves provision of small loans, microloans or financing usually in the form of credit to help the targeted people, family, individual to have a sustainable source of income. In other words, it is provision of credit to the poor people. Now these poor people, because they do not have collateral, they do not have any sources and resources which could be presented to banks to have access to traditional capital. These people do not have bank accounts, hence they are called financially excluded. So microfinance is provision of credit to those who are financially excluded, who otherwise do not have access to any formal credit. The idea was pioneered by Professor Muhammad Yunus, who is a Bangladeshi academician. He started this movement in his country around 1970s and this actually proved to be a very successful venture, not only in Bangladesh but it spread to other countries of the world. This service of Professor Muhammad Yunus was acknowledged by way of presenting a Nobel prize, Nobel Peace Prize to him in 2006. So that actually gave a lot of prominence to microfinance in the world. Now it is on the agenda of almost all the countries of the world, especially the developing countries. Now I would like to spend a couple of minutes on the comparison between microfinance and Islamic banking and finance. Microfinance and Islamic banking and finance started roughly at the same time in the 1970s. Now the question arises that microfinance has received such a huge appreciation on a global level that its founder received a Nobel Peace Prize. Islamic banking and finance on the other hand side, although it is a lot bigger than microfinance market but it has not received that kind of recognition especially from the West. Why? Many people say that this is because of the Islamic identity of Islamic banking and finance and this is why they say that if Islamic banking and finance is presented as an ethical form of banking and finance it might have a lot more appeal worldwide than it has now. Now coming back to microfinance, the model of microfinance or microcredit which was pioneered by Professor Muhammad Yunus that was and that is actually interest-based. This heavily relies on interest rate mechanism which is a problem from Sharia viewpoint. Now this diagram gives us a sketch of microfinance. So this person receives 50,000 rupees from a conventional microfinance provider, uses this money to buy some merchandise and of course through trade of this merchandise this person happens to make some money. So we assume this could be an exaggerated figure but we assume that the person earns 120,000 per month. Now out of this 120,000 he will have to give some money to the microfinance provider because he will have to return the money 50,000 plus some additional money if that happens to be interest-based which is the case and of course the remaining amount the person would be keeping with himself. Now if that person returns 5000 rupees to the microfinance providers on a monthly basis for a period of 12 months. By the way microfinance arrangements are normally about 9 months to 18 months roughly about 11-12 months on average and if there is further need for financing then the contract is rolled over. Now 5000 rupees a month for 12 months that is 60,000 rupees after one year which means the microfinance provider is receiving 10,000 as a return on the financing which happens to be about 20% annual return. In actual practice the interest rate ranges from 25 to 36% in some extreme cases this is actually 40% or more. Some people find it exploitative you are charging 25% 30% 40% interest rate from this poor person this is exploitative. Some people say this is Zoom what do you think I am not going to share my views as of now later on I am going to share but I would like to ask you whether you think that this is exploitative. Now many analysts actually believe that it is quite reasonable rate of return it is quite reasonable to charge 20% 25% and so on especially given that these guys the recipients of finance did not have any access to credit before that. So if a microfinance provider is giving them money to change their life why not so in many cases microfinance or microcredit is actually life changing. As a result of the utility of microfinance and its recognition in the world the likes of World Bank, United Nations and so many other multilateral institutions are promoting this kind of financing as it is helping certain segments of the society especially women to become financially independent. As I said however it is not acceptable from Sharia viewpoint because it involves interest. So can we produce a Sharia compliant solution to microfinance this is something we are going to learn in the modules to come.