MURABAHA What is Murabaha? Murabaha refers to an installment credit agreement for the sale of tangible goods. The seller acquires an asset, which the buyer agrees to purchase at some point in the future. The seller is entitled to a profit, as long as the exact markup is disclosed in the contract. Payments may be spread out over time. Murabaha agreements are often used for real estate financing and other purchases that are paid off over time. MURABAHA (SMALL) HEADS Trade (MURABAHA) Trade size 5,000 ($ 60 )to 30,000 ($ 357)           Annual increase in trade size In accordance with the business performance Rate of profit 24%     Duration of installments 1 year Exempted days Eid holidays Total installments 22 Frequency of payment Fortnightly Collateral Personal guarantee Collateral 2 Post dated cheques ELIGIBILITY FOR MURABAHA (SMALL) FARZ FOUNDATION offer this facility to a female member of the family The household consisting of  6 to 7 members should have a daily income from $ 2 to $ 5 The house hold should be willing to accept the facility.   Should have the sufficient knowledge and experience of the business. MERITS Economically active but backward families can enhance their income through FARZ FOUNDATION. Enable women to be economically productive Empowerment  of women  in  decisions making Enable a household to provide education, health facility and healthy meals to their children’s CRITERIA OF MEMBERSHIP HE/SHE should have good moral character and should not be an addict. Member owning his or her own home should be living there for one year while  the member renting homes should be living there for three years At least  five households should be personally known to him Married , divorced , widow ,unmarried women of 35 years minimum. In rural areas, a member should not have more than 3 acres of agricultural land. Member s age  should range from 18 to 59. The standard of poverty should be indicated with poverty assessment tools BUSINESS CRITERIA Have their own legal business with 1 years experience The business should be within the social centre area REPEAT MEMBERS Should have the good track record Recovery should be 100% Proper usage of the assets /stocks during the first year Attendance should be 85 % in the social gathering Should have continued the previous year business A good members from a cancelled cluster can be taken as a repeat members Those who have not misuse the asset/stock REQUIRED DOCUMENTS FOR MURABAHA (SMALL) The proof of owning the property where business is done (photo copy) In case of renting the place the proof of guarantor’s ownership of the house 2 photo copies national I D card of the member or the head of the family 2 photo copies of national identity card of guarantors Two pictures of a members or head of family each At least 2 quotations of goods required Receipts of business MURABAHA (MEDIUM) HEADS Trade (MURABAHA) Trade size 31,000 ($ 369)TO 80,000 ($ 952) Annual increase in trade size In accordance with the business performance Rate of profit 24%     Duration of installment 1 year Exempted days Eid holidays Total installments 22 Frequency of payment Fortnightly Collateral 1 Personal guarantee Collateral 2 Post dated cheques ELIGIBILITY OF MURABAHA (MEDIEUM) FARZ FOUNDATION offers this facility to female and also male member of the family Incase of female member, the head of the family will be the partner of the business Incase of male member, any of the female of the family, according to criteria mentioned above will be the partner of the business New members can also avail this facility of Farz Foundation The household consisting of  6 to 7 members should have a daily income from $ 5 to $ 7 The house hold should be willing to accept the facility Should have the sufficient knowledge and experience of the business MERITS Economically active but backward family can enhance their income through FARZ FOUNDATION Enable women to be economically productive Empowerment  of women  in  Decisions making Enable house hold to provide education, health facility and healthy meals to their children CRITERIA OF MEMBERSHIP HE/SHE should have good moral character and should not be an addict. Member owning his or her own home should be living there for one year while  the member renting homes should be living there for three years At least  five households should be personally known to him Married , divorced , widow ,unmarried women of 35 years minimum. In rural areas, a member should not have more than 3 acres of agricultural land. Member s age should range from 18 to 59. The standard of poverty should be indicated with poverty assessment  tools BUSINESS CRITERIA Have their own legal business with 2 years experience The business should be within the social centre area REPEAT MEMBERS Should have the good track record Recovery should be 100% Proper usage of the assets /stocks during the first year Attendance should be 85 % in the social gathering Should have continued the previous year business A good members from a cancel cluster can be taken as a repeat member Those who have not misuse the asset/stock REQUIRED DOCUMENTS FOR MURABAHA MEDIUM The proof of owning the property where business is done (photo copy) In case of renting the place the proof of guarantor’s ownership of the house 2 photo copies national I D card of the member or the head of the family 2 photo copies of national identity card of guarantors To pictures of a members or head of family each At least 2 quotations of goods required Receipts of business MURABAHA (LARGE) HEADS Trade (MURABAHA) Trade size 81,000 ($ 964 )TO  150,000 ($ 1786) Annual increase in trade size In accordance with the business performance Rate of profit 24%     Duration of installments 1 year Exempted days Eid holidays Total installments 22 Frequency of payment Fortnightly Collateral Personal guarantee Collateral 2 Post dated cheques ELIGIBILITY OF MURHBIA LARGE FARZ FOUNDATION offer this facility to female member of the family The household consisting of  6 to 7 members should have a daily income from $ 7 to $ 9 The house hold should be willing to accept the facility Should have the sufficient knowledge and experience of the business MERITS Economically backward family can enhance their income through FARZ FOUNDATION Enable women to be economically productive Empowerment  of women  in  Decisions making Enable house hold to provide education health facility and health meals to their children’s CRITERIA OF MEMBERSHIP HE/SHE should have good moral character and should not be an addict. Member owning his or her own home should be living there for one year while  the member renting homes should be living there for three years At least  five households should be personally known to him Married , divorced , widow ,unmarried women of 35 years minimum. In rural areas, a member should not have more than 3 acres of agricultural land. Member s age  should range from 18 to 59. The standard of poverty should be indicated with poverty assessment  tools BUSINESS CRITERIA Have their own legal businesses with 3 years experience The business should be within the social centre area REPEAT MEMBERS Should have the good track record Recovery should be 100% Proper usage of the assets /stocks during the first year Attendance should be 85 % in the social gathering Should have continued the previous year business A good member from a cancel cluster can be taken as a repeat member Those who have not misuse the asset/stock REQUIRED DOCUMENTS FOR MURABAHA (LARGE) The proof of owning the property where business is done (photo copy) In case of renting the place the proof of guarantor’s ownership of the house 2 photo copies national I D card of the member or the head of the family 2 photo copies of national identity card of guarantors To pictures of a members or head of family each At least 2 quotations of goods required Receipts of business FARZ COMMITTEE BACKGROUND The culture of managing COMMITTEES in Asia has very deep roots. In Pakistan this form of informal saving mechanism is also very popular. The Business Development Department of Farz Foundation has conducted an informal survey and learned that the women and men of almost 60% families of Pakistan save money by committees for their businesses and other major expenses. How ever there are a few risks involve in the operations of committee. FOR EXAMPLE they use mode of committees for the marriages of there kith and kin To enhance their businesses To get their children higher education For buying land and building homes To increase their savings To buy home appliances or business tools To initiate new businesses To cater  natural calamity or accidents PRODUCT FEATURES Heads 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 WHY FARZ COMMITTEE Farz foundation facilitates its members to enhance the income through Murabaha along with making them to support themselves through savings. It also helps to create assets for the clients BENEFITS THESE COMMITTEES CAN BE USED AS A SECURE FOUNDATION TO THE CUSTOMERS FOR INVESTING MONEY IN FARZ FOUNDATION AS PARTNERS. This practice of saving enable customer to cop with difficult times Creates kind of partnership between men and women in enhancing assets To promote combine decision  making at family level To secure people’s money through timely payments and recoveries through formalizing the mechanism of committee THE PROCESS OF COMMITTEE WHO CAN BENEFIT FROM THE COMMITTEE? This facility is extended to members, there relatives and even those who live in the same area of operations of Farz Foundation. WHEN THE PROCESS OF COMMITTEE BEGINS: Fourteen days after receiving Murabaha a social gathering is arranged where this process of committee begins WHO MANAGES FARZ COMMITTEE? A cluster of 1o – members’ consisting of to five – members group along with Farz Foundation as eleventh member forms a committee group. It is managed by the social officer of Farz Foundation with the support of group leaders. The leaders assist social officer in book keeping on behalf of group members. The Farz Foundation also provide a committee record book to members which contains all the details about committee payments, receipts and number of committees. THE SUM NEEDED TO INITIATE COMMITTEE Group members determine the some of committee after every fourteen days, which arranges from 100 to 1000 rupees. HOW TO COLLECT COMMITTEES In the social gatherings all the members give the sum of committee to the social manager through group leader via cluster manager (cluster leader member) HOW TO DRAW A COMMITTEE When the total sum of committee is accumulated the money is delivered to one member after a lucky draw POLICY All the chits bearing the names of members for lucky draw are kept by social officer and cluster manager One who wins committee is out of the process of every next lucky draw Farz Foundation will receive the first committee following the general rule of committee according to which the one who manages committee always receives the first manager The second committee will be given to the cluster manager because she or he assists in the committee process. All the rest will get their committees through lucky draw FARZ COMMITTEE METHODOLOGY, A Graphical Expression Committee Group 1ST MONTH OF COMMITTEE 2ND MONTH OF COMMITTEE 3rd to 11th Month of Committee The Difference between Farz Committee and Conventional Committee Conventional Committee is in formal and without maintaining any book keeping record or receipts. Farz Committee is a systematic service having a fool proof book keeping order with all recoveries and payment records by a professional IS (Information System). Conventional committee is unsecure and the person managing the committee can be a risk in case of dislodgment, accident, death or dishonesty e.t.c. Wile the Farz committee is a risk free committee due to having a sound and legal institution as a manager and a participant as well. Most of the time Conventional committees remain late from the due date. Farz Committee is an on time recovery and delivery mechanism like a microfinance best practice. Through this method of Farz committee the client is also encouraged to invest the sum of committee in Farz Foundation upon which the client can get 7 per cent profit as an Motharib. (Islamic investor).This also compliments her or his business which further empowers the client to sustain her or himself. This process also banked the unbanked ones providing this facility at the door step without incurring and charges to the client.   FARZ COMMITTEE PROVIDES AN OTHER SOURCE OF INCOME TO THE CLIENTS IN CASE OF INVESTMENT IN FARZ FOUNDATION TAKAFUL INTRODUCTION Life Takaful (The alternate of insurance) is given so that in case of the death of the members, their family could be secured for at least one year MERITS The members get financial support in case of the Death of member there is no need to return the money ELIGIBILITY FOR TAKAFUL Farz Foundation extends this facility to members of cluster and their heads of the families   TAKAFUL FEE TAKAFUL AMOUNT MEMBER 115 20,000 HEAD OF the FAMILY 115 20,000 THE METHOD OF VERIFICATION Step-1 In a case of the death of a member or head of the family, cluster committee will inform the social centre. Step-2 Social officer will visit the cluster for condolence and verification asking the family members to provide the required documents to the social centre within 2 days. METHOD TO REIMBURSE THE TAKAFUL MONEY Farz foundation will deduct its outstanding amount out of the claimed amount and would pay the rest to the bereaved family. REQUIRED DOCUMENTS FOR TAKAFUL CLAIM National ID card of a member or head of family Hospital or NADRA death certificate Affidavit of the cluster committee verification details by social officer or social manager   BUSINESS EDUCATION Four Types of trainings: 1. INITIAL BUSINESS TRAINING The first one is regarding the market research, collecting information about the potential buyers and venders dealing in raw material/finished goods. It also help client decide the type of business which he or she deems more suited to his or her aptitude. The business plan or feasibility is also part of the initial training.  2. BUSINESS DEVELOPMENT The second training deals with the clients/non-clients having already running business but they lack the skills to efficiently run it. They are taught to conduct their relations with clients and vendors a more productive relationship. They are also provided effective market linkages to make their business more profitable. They are also trained to market their products more effectively. 3. BOOK KEEPING The training deals with daily book keeping monitoring the expenses and income. 4. PRODUCT QUALITY This type of training teaches to enhance the quality of the product they intend to sell so that they can compete in the market to their advantage. TRAINING DETAILS TRAINING # OF DAYS TARGET PEOPLE FEE INITIAL BUSINESS TRAINING 5 Days Poorest of Poor Who intend to do Free BUSINESS DEVELOPMENT 3 Days Running Business(Clients or Non-Clients) Clients who will graduate from Murabaha (small) into Murabaha (Medium) and Murabaha (Medium) into Murabaha (Large)  Free BOOK KEEPING 2 Days Existing Clients Free PRODUCT QUALITY 7 days to One Month Home Base Micro Entrepreneur (HBMEs) Free HEALTH The biggest reason for the low productivity according the WHO is the poor health all over the world. The Farz Foundation pays keen attention to this aspect and conducts health awareness workshops and health camps. AWARENESS PROGRAM  The greatest problem in the area we work is the water born diseases and we teach them to boil water before drinking. The general principals of cleanliness for instances, washing hands before taking meals are emphasized during the training. EYE CARE Farz Foundation has launched its eye care program by starting a free eye care camp for poor peoples of the branch area. In this camp Farz Foundation provide eye checkup facility and provide spectacles to the poor home based micro entrepreneurs with any cost. FUTURE PROTECTION PROGRAM This program deals with educating the clients to provide education to their children apart from picking the kids of the most vulnerable members and provide expenses for their education. This is done to ensure the better future of the community.   FarzFoundation.org © 2010 | All rights reserved