2,000 self-help groups embrace Islamic banking model to offer interest-free loans

Each SHG has 20 members or more and the working capital is raised from the money that they contribute.​

Published: 30th January 2018 01:35 AM  |   Last Updated: 04th February 2018 01:04 PM   |  A+A-

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Representational Image (File | PTI)

Express News Service

KOZHIKODE: Islamic banks are yet to gain traction in Kerala, but nearly 2,000 self-help groups (SHGs) in eight districts have been operating on the lines of Islamic banking under Sharia norms, offering interest-free loans to its members.According to the Interest Free Associations’ Coordination Committee (INFACC), a society working to bring all SHGs under one roof for promoting zero-interest microfinance, more than 40,000 members have been benefiting from the scheme, which is aimed at helping people escape from the clutches of the blade mafia and loan sharks.

“We can truly say that this is a successful model of Islamic banking at the micro level, promoting zero-interest microfinance. Though we launched the project to promote the microfinance model in 2012, it was only in the last two years that we could penetrate at the grassroot level and bring SHGs from Kasargod, Kannur, Kozhikode, Malappuram, Wayanad, Thrissur, Ernakulam and Alappuzha under one roof to coordinate their activities. In due course, we will expand our operations to other districts of Kerala,” said INFACC chairman T K Hussein.

Each SHG has 20 members or more and the working capital is raised from the money that they contribute.
“Once a sufficient fund is raised, a member can avail a loan after finalising a repayment period. The model has become successful as the people can rely on their SHG for money in case of an emergency and that too without any hassle. As the SHGs are managed by people of their respective localities, they know the economic background of each member and their repayment capacity.

Loans are sanctioned only by a committee after analysing the merit of each application,” Hussein added.
As per a study, there has been a big spike in the number of institutions offering interest-free loans since 1990. Between 1970 and 2010, Malappuram registered the highest number of such institutions with 165, followed by Kozhikode (72) and Ernakulam (32), the study shows.


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  • md.firoj uddin

    very good news for me and indian muslims. i want more islamic finance news . i am firoj from wb
    3 years ago reply
  • md.firoj uddin

    please infacc office address and cont.
    3 years ago reply
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