First Islamic Microfinance in Pakistan 1

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FARZ METHODOLOGY

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Vision“To bring social change through

poverty alleviation by improving

productivity and capacity of clients

and staff”

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MissionEmpowering the poor

through innovative products and diverse

business opportunities, by integrating social

performance focused microfinance with collaborative community

health and education partnerships.

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TARGET MARKET

Business & Environmental education

Health

Financial Service

An Integrated Approach

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TARGET MARKET

Upper

Middle

Lower

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LowerNon-Poor

• Large Murabaha + Takaful + Committee (participatory saving) +Health Care Awareness +Business & Environmental Education

Poor

• Medium Murabaha +Takaful + Committee participatory saving) +Health Care Awareness +Business & Environmental Education

Moderately Poor

• Small Murabaha + Takaful + Committee (participatory saving) +Health Care Awareness +Business & Environmental Education

Poorest of the poor

• Zakah or charity in kind or in shape of income generating tools) +Health Care Awareness +Business & Environmental Education

Product Packages for Each Market

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Murabaha

Product Trade Size

Murabaha (Small) PKR: 5,000 to 30,000

Murabaha (Medium) PKR: 31,000 to 80,000

Murabaha (Large) PKR: 81,000 to 150,000

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MurabahaTarget for One Social Center (Branch)

Product Target

Murabaha (Small) 1,080 Clients

Murabaha (Medium) 180 Client

Murabaha (Large) 0

Year 1st

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Clients Graduation Strategy

1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year 9th year 10th year0

200

400

600

800

1000

1200

1080

734

499

340

231

157

10773

49 34

180

468

553536

473

396

319

251

194

148

0

58

207

384

556

707

834

936

1017

1079

Murabaha Small Murabaha MediumMurabaha Large

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Identification of Area for Operation To allocate the Area for Social Center (Branch) To allocate the Potential working areas for social center Product need assessment.

Potential businesses. Cash flow of different businesses. Size of micro trade.

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Staff Hiring

Add for staff hiring in local News paper. Collection of CVs as per given date. Short listing of CVs and finalize prospective

Candidates for interview. Sending calling letters to all selected interviewees.Conduct 1st interview

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Capacity Building of Staff To deliver the orientation of FARZ FOUNDATION to final candidates for jobs. To deliver three days Step-in-Training to all Selected staff.(In house)

Islamic banking & finance . Conventional microfinance Farz Methodology Basic Selection criteria of FARZ FOUNDATION Area survey Effective Mobilization skills Clients appraisal training Cluster formation steps Conduct of community meetings Customer relationship management Social performance management Delinquency management Monitoring

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Three days on the job training to the staff. Basic Selection criteria of FARZ FOUNDATION Area survey Effective Mobilization skills Clients appraisal training Cluster formation steps Conduct of community meetings Customer relationship management Social performance management Monitoring Islamic banking & finance . Conventional microfinance Farz Methodology

Interview and selection for one month internship Selection for 11 month on a contract. After 11 month, contract extension / permanent

employee.

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Social Center (Branch) Opening

Social Center Opening Ceremony Mobilization

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Kicking of Operations

Social Manager

Accountant

SO Small

Murabaha

SO Small

Murabaha

SO Small

Murabaha

SO Medium

Murabaha

Office Boy

Branch Structure

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Cluster Manager

Group Leader

Member

MemberMemberMember

Group Leader

Member

MemberMemberMember

Group Leader

Member

MemberMemberMember

Group Leader

Member

MemberMemberMember

Cluster structure

CLUSTER COMMITTEE

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Step 1 •Mobilization

Step 2 •Community Meeting

Step 3 •Home screening + KYC Home

Step 4 •Business Screening + KYC Business

Step 5 •Final Formation Meeting

Step 6 •Asset Purchasing

Step 7 •Sale Agreement and Delivery of Asset/stock

Delivery Process

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MOBILIZATION

Identification of potential clients within above mention target market.

Identification of the potential businesses.

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COMMUNITY MEETING

What is the eligibility criteria for taking our product Systems and procedures for taking our product. Your and our responsibilities for managing social

performance at cluster level. Introduction of program.

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HOME SCREENING + Know Your Client & Application Form Filling

Verification of Client’s according to the member selection Criteria

Information Collection (Home Related)

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BUSINESS SCREENING + Know Your Client & Application Form Filling

Verification of Client’s Business according to the member selection Criteria

Financial Analysis Repayment Capacity Business Information Collection

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FINAL FORMATION MEETING Approval of Trade (Murabaha)

Briefing to the Clients about Sale, purchase, price, cost, profit, sale agreement, System, Procedures and repayments Schedule

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ASSET/STOCK PURCHASING

Selection of standardize Venders/Whole Sellers To Purchasing of Asset / Stock as per demand of

Client’s Business

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SALE AGREEMENT and DELIVERY OF ASSET/STOCK

Transparency of Sale Agreement Transfer of Ownership

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MONITORING & EVALUATION

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Daily, weekly, monthly, quarterly and six monthly reports system.

Field visits of bottom to top Management. Fortnightly Meetings with 100% Clients. Social Performance Management.

MONITORING & EVALUATION

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Asset Building

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Farz CommitteeFarz Committee ? Participatory saving

Group size in One Cluster 11 Members

Maximum Groups in One Cluster 3

Minimum Committee share 100

Maximum Committee Share 500

Collection Day Social Gathering Day

Collection Frequency Fortnightly

Withdrawal through Lucky Draw Every Month

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Health Care

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Health Care

Organizing Eye care Camps Health Awareness Program

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Future Protection

Program

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Future Protection Program Educational Support to Community children

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Entrepreneur Development

Program

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Clients Capacity Building Strategy

1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year 9th Year0

50

100

150

200

250

300

350346

235

160

109

74

50

3423

16

58

150

177172

151

127

102

80

62

Trained for Murabaha Medium

Trained for Murabaha Larg

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327 EDEN Center Jail Road LahoreURL: www.farzfoundation.org

Email: info@farzfoundation.orgPh:092+42-37556194-5

Thanks