Islamic finance institutions are increasingly considering the benefits of introducing zakat as an essential part of their financial product range

The introduction would align with the Islamic principle of sharing wealth among those in need. The practice enforced by the Quran is considered one of the five pillars of Islam.

Ikram Monfaradi, head of retail marketing and product strategy at Amanie Finance (Amanie), said that up until now, zakat had not been marketed to consumers like every other element of Sharia-compliant banking products.

“There must be aware of this aspect to establish that it has become an integral part of our religion,” he told The Edge Financial Daily in a recent interview.

“The introduction of the product will be in line with our Vision 2020 to develop Amanie as a complete financing solution provider, where customers do not need to go anywhere else for their financing needs,” he said.

He pointed out that a significant problem facing Islamic finance today is a lack of awareness and understanding about why financial products are Islamic-compliant.

“This has resulted in some parts of the Muslim community shunning such products because they find them too complicated or expensive.”

According to Monfaradi, the rationale behind offering zakat as an essential part of an Islamic financial product is to instill trust among Muslims who may be apprehensive about Islamic financing.

“It is important for us to promote the products among the Muslim community, as it will take off some of our financing burdens and also enable Amanie to grow,” he said.

He pointed out that this would help attract additional funds into Islamic financial institutions, especially overseas, where zakat is viewed as an integral part of every Muslim’s life.

The Quran considers zakat to be a responsibility for all wealthy Muslims.

It can be paid annually after Ramadan or at any time of one’s choice, and it should be given only to specific groups of people, such as relatives, friends, and needy people.

In modern terms, zakat has been defined as being two-fold: Zakat Fitrah/Amanah and Zakat Prohibitions or Ushr.

Zakat Fitrah is a compulsory payment made on the day of Eidul Fitri before Salaah. At the same time, Zakat Prohibitions refer to that which must not be levied — usually, 10% — from different assets or properties and may be paid anytime during the year.

It is an integral part of every Muslim’s life. Paying zakat can be done anytime during the year, not just after Ramadan. Amanda understands that pockets within the community may be hesitant to use Islamic financial products due to a lack of understanding about the various types of financing, so they are starting to explain zakat as a means to establish trust with their customers. Understanding this essential aspect of Islam will help ease apprehension among Muslims by instilling confidence in them towards Amanie products and services.

Currently, Amanie offers a Mudarabah Deposit (term deposit) with zakat payment functions built-in. With this product, customers have to set aside a particular portion of their savings as zakat payments from time to time. The amount can be deducted automatically from the account balance or by making manual transfers through Amanie’s zakat calculator.

Commenting on this, Monfaradi said that the Mudarabah Deposit is available for both local and overseas accounts. “For overseas account holders, they can choose to pay gross or net of tax.” Currently, this product is only offered in Singapore.

“There are no savings products in Malaysia where customers can benefit from paying zakat,” he said, adding that it will be helpful to have a savings plan with an element of zakat built-in.

He explained that although Islamic financial institutions may not be offering savings plans now, products come with payment options when the customer opens the account through online banking functions. The idea is to provide Islamic financial products with different risk profiles with zakat payment options.

“So whether you have five employees or are self-employed, your savings plan will come with different risk profiles.”

Amanie, he said, has been receiving positive feedback from the Malaysian market when it comes to introducing zakat as part of its financing products.

 

Please Visit SKT Welfare to pay your Zakat.

Author

  • Elizabeth Howard is a seasoned writer who loves to write on topics related to Business, Finance, Marketing & Energy Markets. Well known for her eloquence, Liz is a full time contributor to a dozen top notch publishing portals.

Elizabeth

Elizabeth Howard is a seasoned writer who loves to write on topics related to Business, Finance, Marketing & Energy Markets. Well known for her eloquence, Liz is a full time contributor to a dozen top notch publishing portals.

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