Role of Islamic Banks for Eradication of Unemployment
By: Muhammad Asghar Shahzad
Email: asghar.shahzad@iiu.edu.pk
Due to increasing rate of unemployment, the Islamic Banking industry should play its role for eradication of unemployment by financing the unemployed people through different modes of financing. Here one model is proposed on Modaraba basis.
As number of Universities are offering technical degree programs and every year hundreds of students graduate from Universities which also increase the rate of unemployment. The Islamic Banks can play their role to reduce unemployment through financing.
Model:
- Mr. "A" who have graduated from a University and have expertise in the field work. He want to run a business. He applies to "ABC Islamic Bank".
- After evaluation of his application the Islamic Bank approve his application
- Mr. "A" and "ABC" Islamic Bank enters into Modaraba agreement where the Bank will be Rab al Maal and "Mr. A" will act as Modarib.
- Islamic Bank will finance the business as Rab al Maal
- "Mr. A" will run the business through his expertise and efforts.
- The profit will be distributed on agreed terms.
- In case of Loss which will be born by Rab al maal
Note: Islamic Banking Experts are requested to please guide me in its risk management and other important issues. Please contact me on my email ID mentioned above.
