chapter  10
10 Pages

Salam finance

Securing the purpose of microfinancing
ByAtiq-ur-Rehman

Microfinance for household enterprises is one of the most effective strategies for poverty eradication and rural development; but, at the same time, it maintains persistent deficiencies for different reasons (insufficient entrepreneurial skills of the recipients; use of funds for purposes which are not related to income generating activities; danger of a debt trap when the borrower is not able to repay the debt; scarce impact on the poorest among the poor). By advancing practical solutions to overcome these issues, this chapter highlights how salam financing can represent a viable tool for securing the social objective of microcredit as a strategy of financial inclusion.