Qard-e-Hasan: Benevolent Loans Breaking the Chains of Interest
Qard-e-Hasan is the by-product of the idea that an act of empowering a person to earn his own finances is a better alternative to giving charity. This financial concept frees us from the desire for profit maximization. The emergence of the concept of ‘interest-free’ was clearly a challenge to the conventional economic system and it was never anticipated to make a significant impact. Microfinancing took a new turn with the blending of the spirit of solidarity for the poor of society in its conventional principles.
Islamic principles have encouraged the lending of zero-interest loans with the intention of mutually supporting the underprivileged brethren. The practical manifestation of this concept has given birth to interest-free microfinance institutions that use interest-free loans or Qard-e-Hasan as a tool to empower segments of society.
Let’s further explore how Qard-e-Hasan or benevolent loans are making a difference and breaking the chains of poverty.
Changing lives for the better, one loan at a time!
The Unique Vision of Beautiful Loans
Qard-e-Hasan, an Arabic term, translates to “good” or “beautiful” loan. It’s an interest-free loan given to individuals in need. The unique aspect? The lender isn’t looking to make a profit from this transaction.
Faith-based values of benevolence and social justice motivate loan donors to pursue the lending of interest-free loans. Their sole purpose is to provide financial assistance without any desire for profit maximization. The gain which they long for does not pertain to humans’ material existence but is anticipated in another life, through a Higher Being.
Qard-e-Hasan is More Than Just Money
It’s time to answer the most asked questions about the benevolent loans. What makes Qard-e-Hasan, an unconventional and beautiful loan? How do these loans meet the objectives of poverty alleviation?
A route to building a life with dignity
The Qard-e-Hasan empowers loan borrowers to tackle their financial challenges head-on without having to choose between begging and self-respect. They build their lives with borrowed money instead of begging for some pennies. Poverty isn’t a hit on their self-respect anymore. Whether it’s starting a small business, pursuing education, or addressing immediate needs, these benevolent loans provide them a chance to carve their prosperous financial futures.
These interest-free loans are not constrained by timely return conditions. The borrower of these benevolent loans returns them whenever he/she can easily do so without coercion. This relieves the beneficiary of the burden of returning the loan money and hence, they willingly and happily return them after availing of their full benefit. Akhuwat’s recovery rate standing at 99.9% is a testament to the fact that these ‘beautiful loans’ are a true manifestation of brotherhood catalyzing economic and social prosperity.
Interest-free is Stress-free
The hefty interest rates associated with traditional loans are the biggest hurdle in the way of poverty alleviation. They often bring more harm than benefits. Benevolent loans are also called ‘interest-free loans’ as they are free from the menace of compounding debts or sky-high interest rates that intimidate the borrowers. This makes the journey to financial stability less stressful and more practical.
Source of Community Support through Mawakhat
Profit maximization isn’t the goal of the Qard-e-Hasan institution. It’s more about individuals contributing to the community. These interest-free loans foster a sense of financial brotherhood, with those who have to lend a hand to those in need.
Real-Life Impact of Interest-free loans
Some real-life examples illustrate how Qard-e-Hasan is changing lives and decreasing poverty footprint.
Naveeda’s Tailoring Business: In a small village in Azad Kashmir, Pakistan. She received a Qard-e-Hasan loan from a local branch of Akhuwat Islamic Microfinance Institution. With this interest-free loan, she started a small tailoring business but also escalated it into a tailor teaching center. Her will to equip local women with skills to earn with their own hands resonates with the spirit of mawakhat introduced by Akhuwat. Today, her business thrives, providing employment to several villagers and improving the entire community’s economic prospects.
Watch Naveeda narrate her story.
Education Opportunities in Pakistan: In Pakistan, plenty of charitable foundations offer interest-free loans for education of students who have the knack for acquiring quality education but lack financial resources. Among them is the name of Akhuwat.
The concept of fee-free education is based on the interest-free loans provided to the student to complete their education, attain skills, and be able to earn with dignity. These benevolent loans can be returned at any time when the student is capable of returning the principal amount. To date, many beneficiaries have completed their degrees and are now contributing to the nation’s development in a variety of fields.
Community Development in Senegal: In a remote village in Senegal, a mosque committee established a Qard-e-Hasan fund. They have used this fund to provide villagers with interest-free loans to repair their homes, start small farms, and invest in clean energy solutions, leading to improved living conditions and economic sustainability. Many more places around the world utilize this concept to expedite community development and help the underprivileged segments of society.
Qard-e-Hasan or interest-free loans, are a shining example of how financial concepts can be used for the betterment of society. With organizations worldwide leading the charge, these interest-free loans are transforming lives, fostering financial empowerment, and building stronger communities.