Innovate and Modern Modeling in Micro-Finance Structure in Compatible with Islamic Shariah Rules

Micro financing is providing financial services and resources for low-income people to improve their financial situation. In many less developed countries, providing these services for low-income classes was next to impossible due to high interest rates and heavy collaterals and guarantees that banks and other credit institutions demand. Micro financing was used since 1960s as a fundamental approach to eliminate these barriers and could relatively provide credit and financial services to lower income and poorer populations. However, large groups of Muslim population, who prefer Islamic based financing for themselves and their families, do not have access to such financing. Considering this issue and the limitations in Islamic societies face in using financial services, this paper tries to propose a model of Islamic Shariah-based model of Islamic micro financing, suitable with the financial and credit needs of lower income Muslim societies.JEL: G21 138.