REPORT ON ISLAMIC BANKING AND INSURANCE AT AL-HAYAT MICRO FINANCE BANK
ABSTRACT
The purpose of writing this report is to address what happen at Al-hayat Micro finance at Ijebu ode. On
the 12th of December 2019, We visited Al hayat micro finance bank and the lecture started by
introduction of the co-workers of the micro finance which are the Mr Rahim Musa, Mr Kukoyi and other
executives . The main findings is to have deep knowledge about how to operate an Islamic bank and the
method they use in operating the bank. The significance of the findings is to assist one on how to
operate Islamic bank, what their challenges are, and finding solution to those issues.
TABLE OF CONTENTS
i. Product of Islamic Banking
a. Murabah
b. Istisna
c. Mudarabah
d. Ijarah
e. Musharakah
ii. Bases of Islamic Banking
iii. Challenges facing Islamic Banking
iv. Solution to Islamic Banking
INTRODUCTION
Islamic Banking and insurance deals with the principles of Islam or sharia law and guided by Islamic
economics. The Islamic methods of finance are therefore socio-economic in nature, as it not only takes
care of making profit but also addresses social responsibility, since these aspects are equally applicable
for Muslims and non Muslims alike, it becomes clear that Islamic banking and therefore its benefits are
not restricted to Muslims alone but applicable to the whole of the humanity in general.
BODY OF THE REPORT
Islamic Banking and Insurance has different ways of operating it which is known as the product in Islamic
Banking which was explained to us by the Head of Information management at Al Hayat Micro finance
which are the following;
i) MURABAH: means cost plus, to disclose price and add the cost profit and resell.
ii) ISTISNAH: According to him, istisna is meant for financing anything like construction e.g house
construction.
iii) MUDARABAH: Investee and [Link] deals with money and Ideas, the capital is not guarantee. If
the loss is based on the negligence of the investee he will bear the risk alone but if is not due to his
negligence both will bear the risk alone.
iv) IJARAH : The basic item is that you lease the product to the customer. Right of sale.
BANKING BASES
I) Lease
II) Debt
III) Equity
IV) Trading
CHALLENGES OF ISLAMIC BANKING
a) Lack of Appreciation.
b) The ability of people to distinguish between Islamic banking and conventional banking.
c) Lack of staff that has knowledge and skills.
d) Capital Intensive (fund).
e) Default rate: Those that borrow money and not pay back.
f) Issues of software that is compliant with Islamic banking.
g) Knowledge gap.
. SOLUTION
Lack of Appreciation: This has been one of the challenges facing Islamic Banking where customers that
are Muslims are not patronizing the Islamic Banking . The solution are as follows;
I) Orientation about the basis of Islamic bank: Muslims and non Muslims all over the world should be
oriented about Islamic bank, the benefit to make them distingish between islamic banking and
conventional banking through television, news paper, radio e.t.c.
II) Introducing Islamic banking and finance as a course of study in the university like we have accounting
as a course so that there will be enough personnel to work in the bank or people that will specialize their
skills on it.
III) We should make them aware about the proof from the Qur'an and hadith on issues of collecting
Riba(Interest) which is haram in Islam.
IV)They should promote fraternal bonds between Muslims and non-Muslims by providing benevolent
loans that are interest free.
RECOMMENDATION AND CONCLUSION
Islamic Banking problems in the the bank are related to funds, knowledge gap, default rate. It is
therefore recommended that orientation about the bank should be instill to all Muslims and non
Muslims such as Al Hayat microfinance bank and other Islamic banks in the world.