Micro Financing Products and Business Model of Islamic Micro Finance Institution (Imfis) In Indonesia: Lessons from Baitul Maal Muamalat (BMM)

Abstract

This paper attempts to elucidate the micro financing products and business models of micro finance in Baitul Maal Muamalat (subsidiary of Bank Muamalat Indonesia). During 2010 Bank Muamalat has been distributed the social fund through BMM as much as Rp 22.8 billion. The funds are distributed in the form of the micro financing program for economic empowerment through LKMS and KUM3 program. LKMS program is channeling fund to Islamic Micro Finance Institutions (IMFIs) through linkage program. While KUM3 program is channeling micro financing to 24 cities that are consist of 183 mosques and 4647 Mustahik (poor recipients). This program encourages Mustahik to increase their business line with modern business management. The program mission are to facilitate the micro business community through the utilization of ZIS (Zakat, Infaq and Sadaqah) funding, to build organization quality of the mosque as a basis of development and strengthening the quality of brotherhood as the basis for the establishment of micro enterprises, encourage the habit of giving, and create awareness of modern business management and ensure the business activity free from Maysir, Gharar, and Ribā. There are three kinds of financing program of KUM3 which are Aqh Model, second, Qard model and the third is Musharakah model. The KUM3 financing model is Sharīah based model that use a variety of Islamic contract such as profit and loss sharing system between participants. In addition, BMM arranged the curriculum model of financing through the KUM3 program.

Keywords: Baitul Maal Muamalat, Micro financing, Business Model.