• Farah Muneer Institute for Inclusive Finance and Development (InM), Bangladesh
  • Foyasal Khan International Islamic University Malaysia, Malaysia
Keywords: Qard al Hassan, Poverty Alleviation, Fael Khair Waqf, FKW Program, Cost Of Basic Needs, CBN Method, Logistic Analysis


The central focus of the Islamic economic system is on socioeconomic justice and the overall welfare of society, especially at the bottom of the pyramid segment. Qard-al- Hassan, alongside zakat and sadaqah, is one of the instruments for the redistribution of income and wealth from the rich to the poor in Islam. In 2007, Bangladesh was struck by super cyclone SIDR, leaving 3,406 people dead. Moreover, SIDR caused unprecedented damage to homes, crops and livelihoods. The Fael Khair Waqf (FKW) Program came as a response to the urgent need to assist the victims of the cyclone and initiated an interest-free micro-loan (Qard-al-Hassan) scheme to restore the livelihoods of a large segment of the victims and to lift them out of poverty. While investigating the effectiveness of Qard-al-Hassan in poverty reduction, this paper also examines the FKW program as a case study. Analysis was conducted of 1600 households using an independent sample t-test and logistic regression to investigate to what extent the program has been effective in reducing poverty. The findings of the logistic analysis are that the probability of being poor for FKW participants is around 1.46 times lower than for non-participants. Moreover, the Qard-al-Hassan of FKW lowers the cost of borrowing significantly and hence participants can accumulate more assets, which might help them to improve their economic status. Overall, the effectiveness of the program implies that development practitioners and researchers should promote the outreach of Qard-al-Hassan so that the extreme poor can easily avail themselves of the services.


Ali, A. Y. (1989). The Holy Quran: Text, Translation, and Commentary. Maryland: Amana Corporation.Ali, A. (1999). Climate change impacts and adaptation assessment in Bangladesh, Climate Research, 12, 109-116.

Aslam Haneef, M., Pramanik, A. H., Mohamed, M. O., Muhammad, A. D., & Amin, F. M. (2015). Integration of Waqf and Islamic microfinance for poverty reduction: Case studies of Malaysia, Indonesia and Bangladesh. The Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC).

Banerjee, A. V. & Duflo, E. (2011). Poor economics: A radical rethinking of the way to fight global poverty. Public Affairs.

Effendi, J. (2013). The role of Islamic microfinance in poverty alleviation and environmental awareness in Pasuruan, East Java, Indonesia: A comparative study. Universitätsverlag Göttingen.

Farooq, M.O. & El Ghattis, N. (2015). Qard Hasan, Credit Cards and Islamic Financial Product Structuring: Some Qur’anic and Practical Considerations. Journal of Islamic Financial Studies, 1(1), 1-21.

Farooqi, A. H., Qamar, M. U. R., & Chachi, A. (2017). Role of Islamic Microfinance Scheme in Poverty Alleviation and Well-Being of Women Implemented by Islami Bank Bangladesh Limited. İslam Ekonomisi ve Finansı Dergisi (İEFD), 3(1), 1-32.

Haughton, J., & Khandker, S. R. (2009). Handbook on poverty and inequality. Washington: World Bank.

IFRC (2013), Emergency Appeal Six-Month Consolidated Report – Bangladesh: Tropical Cyclone Mahasen.

Institute for Inclusive Finance and Development (InM) (2016), Impact Assessment Study of the FKW Rehabilitation and Livelihood Program and Implementing NGOs, Final Report prepared for Islamic Development Bank. Dhaka: InM.

Iqbal, Z., & Shafiq, B. (2015). Islamic finance and the role of Qard-al-Hassan (Benevolent Loans) in enhancing inclusion: a case study of AKHUWAT. ACRN Oxford Journal of Finance and Risk Perspectives, 4(4), 23-40.

Izadyar, A. B., Ragnath, F., & Özdemir, M. (2014). A New Perspective of Benevolent Loan, Qard Al-Hassan, Using Upfront Payment ‘Mesbah Point’. Uluslararası İslam Ekonomisi ve Finansı Araştırmaları Dergisi, 1(1), 199-217.

Mohieldin, M., Iqbal, Z. Rostom, A., & Fu, X. (2011). The Role of Islamic Finance in Enhancing Financial Inclusion in OIC Countries. Presented at the 8th International Conference on Islamic Economics and Finance. Qatar: Center for Islamic Economic and Finance, Qatar Faculty of Islamic Studies, Qatar Foundation.

Mansori, S., Chin, S. K., & Safari, M. (2015). A shariah perspective review on Islamic microfinance. Asian Social Science, 11(9), 273-280.MoEF (2008), Bangladesh Climate Change Strategy and Action Plan, Dhaka: Ministry of Environment and Forests, Government of Bangladesh.

Mojtahed, A., & Hassanzadeh, A. (2009). The Evaluation of Qard-al-Hasan as a Microfinance Approach in Poverty Alleviation Programs, 1–32.

Obaidullah, M and Khan, T (2008), Islamic Microfinance Development: Challenges and Initiative, IRTI-IDB, Jeddah

Oyesanyaa, O.S. & Salako, T.A. (2019). A Sharī‘Ah Assessment of Al-Qarḍ Al-Ḥasan (Ethical Loan) and Its Impact in Al-Hayat Relief Foundation, Ogun State, Nigeria. Journal of Islamic Social Sciences and Humanities, 18, 40-59.

Paul, B. K. (2009). Why relatively fewer people died? The case of Bangladesh’s Cyclone Sidr. Natural Hazards, 50(2), 289-304.

Rokhman, W. (2013). Baitul Mal Wat Tamwil (BMT) and Poverty Empowerment. Qudus International Journal of Islamic Studies (QIJIS), 1(2): 181-195.

Shamsuddoha, M., & Chowdhury, R. K. (2007). Climate change impact and disaster vulnerabilities in the coastal areas of Bangladesh. COAST Trust, Dhaka.

Widiyanto, Mutamimah & Hendar. (2011). Effectiveness of Qard al-Hasan Financing as a Poverty Alleviation Model, Economic Journal of Emerging Markets, 3(1), 27-42.

Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data. Second edition. Cambridge, Mass.: MIT Press.

Zauroab, N. A., Saada, R. A. J., & Sawandia, N. (2016). Determinants of Qardhul Hassan financing acceptance in Nigeria. Presented in ISSC 2016 (International Soft Science Conference). Published by Future Academy.

How to Cite
Muneer, F., & Khan, F. (2019). QARD-AL-HASSAN AS A TOOL FOR POVERTY ALLEVIATION: A CASE STUDY OF THE FAEL KHAIR WAQF PROGRAM IN BANGLADESH. Journal of Islamic Monetary Economics and Finance, 5(4), 829-848.