TO CONTINUE "performing miracles in the field of microfinance" in Mindanao, a microfinance expert is encouraging microfinance institutions (MFIs) and mutual benefit associations (MBAs) in Mindanao to go into Islamic finance or Islamic insurance or takaful.

Ernesto C. Galenzoga, president of the RIMANSI Organization for Asia and the Pacific Inc., said that as the world is getting to grips with the reality that the global financial crisis is far from being resolved, the world's financial institutions are turning towards Islamic finance.

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This is because "our Muslim brothers are successful in their financial dealings in this time of world crisis. They are the less affected sector of the financial Ebola virus spreading around the world today."

Because of this, "Islamic finance is now the center of interest among investors and financial institutions around the world," he added.

Galenzoga, who is also president of the RBT-Mutual Benefit Association, Inc. (RBT-MBA), explained that Islamic finance is founded on Islamic law or Shariah principles, which express explicit intention to meet the

financial needs of clients with integrity and in a manner that is just, fair, trustworthy, and honest.

"Islamic finance upholds the principles of integrity, transparency, fairness, and good governance in financial dealings," he said.

Galenzoga, a former rural bank president, explained that unlike conventional banking, Islamic banking is based on the principles of Shariah and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest.

Collecting interest is not permitted under Shariah.

For some types of loans, the borrower only needs to pay back the amount owed to the lender, but in Islamic banking, the borrower can choose to pay the lender a small amount of money to serve as a gratuity.

Also, since Islamic banking is grounded in Islamic principles, all the undertakings of the banks follow Islamic morals. Therefore, financial transactions within Islamic banking are a culturally distinct form of ethical investing, which explains why investments involving alcohol, gambling, pork, etc., are prohibited in Islamic banking.

Galenzoga, a former insurance salesman, also said that in times of uncertainty like the present, financial protection becomes a necessity.

"We all need protection against misfortunes. An individual needs to have protection and the peace of mind that if anything unfortunate happens, his or her loved ones will receive financial support," he said.

This is where MBAs come in because unlike conventional insurance, MBAs are owned and managed by the clients, which simply means that MBA management's decisions reflect the clients' decisions.

But still, MBAs are in it for the profit. This is because like conventional insurance, MBAs are commercial enterprises operating on the premise that the person who agrees to cover risk should reap profit from that transaction.

But in tankful insurance, profit or gain at the expense of others are not included. If claims on the common fund are low, some of the residual amount is kept as a reserve and the balance is distributed as a profit

between the individuals and the takaful operator. The ratio of profit sharing between the parties is agreed in advance in the takaful certificate, or contract, Galenzoga explained.

In takaful insurance, members contribute money into a pooling system in order to guarantee each other against loss or damage, he added.

Takaful comes from the Arabic word Kafalah which means taking care of each other. The concept goes back more than 1,400 years.