suggestions

0 0 Proposed Amendments to DBA’s Microfinance Institutional Regulations Article 1: Add. Subsection 4 “Enhancing Islamic consciousness among micro finance officials and staff and their clients”. Article 4: Replace “financing” with “tamveel” (also in (2) After “purpose of” add “promoting Islamic consciousness” before “growing business” replace “financial” by “tamveeli” before “institutional” remove “which do” Not clear what is meant by “along with profits” Replace finance with tamveeli/tamveeli after micro entrepreneurs and add “and promote Islamic consciousness among them” Replace “financing” with “tamveeli After “including” in both categories replace some by “loans” Replace “financing” with “tamveeli. Add at end “not obliged to have Dawah majlis office”. Add at end “Shall have a Dawah mjalis unit at their head office”. Replace “financing” with “tamveeli” Replace “financing” with “tamveeli. After “supporting micro enterprises” add “and promoting Islamic consciousness among them” Donors not clear not defined. Substitute with “supporters” The Dawah majlis established in second category micro finance institutions and at various systemic hierarchic levels should be part of the governance process. The word “interest” should be removed as it is likely to create confusion. Write “only profit and benefit”. Replace “financing” with “tamveeli 32 In key positions include head of the Dawah Majlis on his nominee. Article 5 (1) after “obliged to” add ‘to apply to’ and remove ‘reserved’ Article 6 Replace “financing” with “tamveeli” The word “process” not clear. Should be written “as the applicant should provide and required information of the members of the supervisory board executive officers and other key partners. A person cannot perform duties in more than one position”. Rewrite as ‘submit plan, procedure, policies etc. in accordance with guidelines provided by the licensing authority’ (sub clause b under clause 6) not clear. Article 7. Instead of “code of ethics guidelines” state ‘policies for promoting Islamic consciousness among management, staff and customers of the MFI and its partners. Article 8 1 not clear. Add clause 5 “guarantee that the financing transactions of the foreign entity will not be linked in any way to its riba and gharar based transactions in any money or capital markets”. Article 9. Capital adequacy requirements may be listed in this article. Article 10. After technical add “Dawah” Article 13. 1. “Add before 3 recommendation by the Dawah Majlis of the MFI that its operations will contribute to the promotion of Islamic consciousness among its employees, managers and customers”. Article 14 (1) Add 4 DBA is convinced that the operations of the MFI is not contributing to the promotion of Islamic consciousness among its managers, employees and customers. 2. After ‘must immediately cease all activities’ add ‘except activities of the Dawah Majlis”. Article 15 the concept of ‘donors’ is not clear. Article 17. Islamic banking should be substituted by ‘tamveeli banking. Article 18 2. After “MFI organizational structure shall include all necessary” insert ‘Islamic ideological’ before safety etc.

3. Add members of Dawah Majlis after board of supervisors. 4. Add 8 “evaluation on the basis of regular reports of the dawah Majlis regarding the impact of the MFI’s operations on the Islamic consciousness of its managers, employees and client”. Under 5 subclause 3 after ‘appointed by general assembly of shareholders” include ‘and nominated representatives of the Dawah Majls” Under 6 1 after “election by General Assembly of shareholders add ‘and nominees of the Dawah Majlis. Under 6 2 after “election of its members as the Chairman” add “who should usually be a nominee of the Dawah Majlis”. Under 6 5 after IT add “fiqh, tafseer and hadith” Under 7 add sub clause 21 stating “ensure compliance of Dawah Majlis recommendations for enhancing Islamic consciousness of managers, employees and customers”. Under 8 2 add “Head of Islamic propagation must be a member of the Dawah Majlis Under 11 1 after ‘approved human strategy add “Islamic value orientation”. Under 11 2 after ‘accelerating transferring add ‘promotes Islamic value consciousness. Under 16 2 after ‘internal and external auditors add “the overall bank Dawah Majlis Article 20 1 replace “law” with “shariah and fiqh” 5 replace ‘law’ with Shariah and fiqh” 4 this subclause should be omitted Subclause 2 (anti-money laundering should be omitted. Article 22 1 under “sale based” products marabaha’ should be omitted as this is very close to interest financing. Article 24. Under 2 after replacement ability” add “Islamic consciousness and Islamic activity “before” of the customer. Sub-clause 3 and 4 should be omitted. Subclause 6 not clear what is meant by the second portfolio Subclause 7 not clear what is meant by the center of the zones. Subclauses 8 and 9 seem contradictory and should be reformulated. Moreover non-bank MFI are not likely to have such large resources to meet obligations Article 25 1 not clear what is meant by sanctions listed persons whose sanctions? American or European union?. Article 28 sub section 2 reference to interest is very alarming. MFI’s should not in principle deal in interest based lending. Reference to “interest creates the supposition that these regulations have been downloaded from some international capitalist source and have been proposed nationally reference to “interest also occurs in sub clause 5 Article 29. Reference to interest also occurs in sub clause 2 and 3 of article 29 Article 31. Sub clause 7 borrower/guarantors profile should also assessed on the basis Islamic commitment and sincerity for Islamic causes. Article 34 Omit reference to “AMG/CFI law money laundering and terrorist financing. These are imperialist precondition. Article 30 should be read as follows. “MFI shall carry out these operations in line with the teachings of the Sharia and in accordance with the accountability and transparency procedures as provided in the company legislation of the Islamic Emirate of Afghanistan. Article 35. Concept of “donor” not clear In (1) 2 subclause replace financing with tamveeli Add 8 “they must accept the obligation to promote Islamic value consciousness among management, employees and customers of MFI.

Article 36 1 add ‘only’ after micro finance institutions. 2 remove “small” before “loans” Article 37 Remove sub clause 3 which modifies sub section 2. 4 remove “subjective” before inspection Remove sub-clause 5 as it negates sub-clause 2 Article 38. Section 3 insert ‘have’ after ‘shall’ Add section 5 “A central MFI Dawah Board will be established to inspect and evaluate the impact of MFI operations on the Islamic value commitment of managers, employees and customers of MFI”. Article 39 4 remove reference to “AMZ/CPP activities 5 remove ‘such as the measurement of ANL/CFT activities. Add 7 “the dawah Majlis of each MFI will submit an annual report of its activities to MFI (central Dawah Board). Add 8 “the final Audit Report will integrate the Tamveeli evaluation report of the auditors and the evaluation of the Dawah Board to provide consolidated evaluation of the economic and dawah operations of the MFI. Ulema inspection committee will be set up at local and district levels to evaluate the Dawah activities of the MFI. Article 40 1 4 subsection 4 add ‘neglect of synchronizing dawah and economic activities’. Article 42 after ‘knowledge’ add sharia 6 add 5 ‘one third of the officials of the Union must be from the Dawah Majlis of the MFI General Comments: Establishing a network of micro tamveeli institution can be a major means for localizing on Islamic economy in Afghanistan. This requires the development of a tamveeli not a financial system both at the micro and macro levels A tamveeli system is distinguished from a financial system in two crucial respects: It organizes the continuing transfer of funds from savers to investors for the production of wealth not an end in itself but as a means for the promotion of the Islamic values of sabr, tawakkul and infaq It therefore rejects the use of riba and gharar based transaction forms. This means that it cannot be integrated within global money and capital markets which are exclusively riba and ghrara based. Such a tamveeli system has existed throughout Islamic history (from the 7th to the 20th century) before its conquest by imperialism). Historically such a system was self-regulating and the Islamic state did not play a major organizing role with regard to its management. But today self-regulation will inevitably lead to the absorption of free markets within riba and gharar based global market structures for capitalists values hirs (accumulation) and hasad (competition) have permeated mass economic behavior. Therefore today the Islamic state must play a market governance role to ensure that mass economic behavior is modelled on Islamic norms. This means that the economic policy framework of the contemporary Islamic state must be integrated with its dawa strategy. If economic policy making is separated from the dawah strategy it will serve as a channel for the inflow of imperialist influences into the Islamic polity and society thus weakening Taliban rule and contributing to the success of the bottom up infiltration strategy of the NATO. Humanitarian group, the World Bank and other UN donor agencies aimed at delegitimizing Taliban rule. Therefore economic policymaking must be included as one important component of Dawah strategy of the Islamic state.

Developing a tamveeli framework is part of the Islamic state strategy for strengthening Islamic community life in Afghanistan. Building communities must necessarily be a state project. This requires both producing economic support to the communities and enhancing their commitment to Islamic values. The micro Tamveeeli institutes (MTI not MFI) must be seen both as Dawah and economic agents for community mobilization. For this purpose Da Afghan Iqtisadi Mushawarti Group suggests the establishment of a Dawah Majlis in lack MTI with representation at both the supervisory and the management level (the chairman of the supervising board should usually be a member of Dawah Majlis). It is also suggested that a Central Dawah board be established to supervise and evaluate the operations of the Dawah Majlis of individuals MTIs. The Dawah Majlis should also has representation in the Advisory Board of the proposed MTI regional unions. The function of the Dawah Majlis of MTIs should involve: Assessment of impact of MTI activities on the moral, religious and spiritual consciousness and behavior of the MFIs management staff and clients. Submitting qualitative reports in this regard to the MTIs supervisory Board and an annual evaluation report to the central MTI Dawah Board. Conduct of religious and spiritual training programs for managers, employees and clients of MTIs. Advocacy and propagation of the economic and social policies of the Islamic government within the MTI and within the MTI served community. Organization of cultural events and religious festivals at the MTI level. Representation of MTI employees interests to management and participation in arrangements for settlement of employee grievances. Facilitation of provision of health and social support services to MTI management and employees. DAIMG is alarmed at the mention of interest in several clauses of the regulation. Of course all MTI laws would be interest free and reference to interest should be eliminated. We also note with concern reference to AML/CFT money laundering and terrorist financing in several Acts. This suggests application of imperialist standards for evaluating MTI performance. The Islamic government must not follow imperialist evaluative procedures or become subject to imperialist accounting. The Islamic government must develop its own accounting and reporting standards. DAIMG is also concerned that the regulation does not mention measures for the obtaining of funds by the MTIs. Deposit taking is banned and the main reliance seems to be on grants and donor funds. This creates the danger of reliance on imperialist funding. We advocate that MTIs be allowed to take deposits. Also capital adequacy controls should be developed. Da Afghan Itqisad Mashwarti Group