Can Zakat Be Used As Microfinance?

CategoriesZakah [192]

Fatwa ID: 05062

 

Answered by: Imam Abdul-Malik Sheikh

 

Question

 

Can zakat be used as microfinance?

 

 

In the name of Allah, the Most Gracious, the Most Merciful

 

Answer:

 

Microfinance is a type of financial service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. It is not a charity rather it is a type of loan. Zakat cannot be given as a loan.

 

Secondly, according to Quran, there are eight categories of people who are eligible for Zakat:

 

  1. The poor (Faqir who has very little wealth below Nisab)
  2. Destitute (Miskin who has no wealth)
  3. Those who are to be reconciled
  4. Those who collect Zakat
  5. Emancipation of slaves
  6. For those in debt
  7. For those in the way of Allah
  8. For the travelers

(See Surah at-Tawbah verse 60)

 

If you are referring to helping people who in debt exceeding the Nisab threshold, then this is permissible as it falls under the fifth category. If it is anything other than the above categories, then it will not be allowed.

 

Reference:

Al-Lubab Fi Sharh al-Kitab, Vol.1, p.122, Dar al-Ma’rifah

 

 

Only Allah knows best

Written by Imam Abdul-Malik Sheikh

Checked and approved by Mufti Mohammed Tosir Miah

DarulI fta Birmingham

 

 

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