A meeting under the banner Forum for Group Discussion on Economic Issues (FGDEI) commenced on 26th April 26 2013 in Dawat Nagar, Okhla, New Delhi. This forum has been formed by Sahulat Microfinance Society in association with Radiance Viewsweekly in order to deliberate upon issues relating to Islamic economics, finance and banking. The meeting started on a welcome note delivered by Mr. Arshad Ajmal, Vice President, Sahulat Microfinance Society. Dr. Waquar Anwar delivered a presentation on the topic of "SCHEME FOR ABSORPTION OF ADMINISTRATIVE OVERHEAD OF INTEREST FREE CASH LOAN ARRANGEMENT".


He has provided some very potential processes for the absorption of administrative by different department in an interest free financial organisation. The points he has given were as follows:

  1. The total administrative cost of the organisation will be divided to the different departments within the organisation. This division will be done either by cost allocation or cost apportionment. While calculation of the cost the cost will be predetermined by previous trend.
  2. A periodical review of the actual cost recovered should be done so that it may be ensured that it is neither a source of profit for nor an avoidable burden on the Society.
  3. Cost absorption of Cash Loan for Non Productive Purpose (CLFNPP) will fall on the cost units of the cash loan centres (CLC)
  4. The cost would be related to the number of persons taking loan because this is different from the existing financial model which is based on interest where premium is calculated on the basis of loan amount and its period.
  5. The method of cost estimation based on the number of persons taking loan make this model interest free.
  6. The estimation of the cost can be done on predetermined basis by the past year's actual data, estimation of future activity based on the previous data and also by the moving average on the basis of last three quarter's actual data.

A live and healthy discussion followed the presentation. Mr. Arshad Ajmal, Mr. Shabbir Alam Khan, Mr. Kamal Ahmad and Mr. Sikandar Azam shared their views on the topic raised by the speaker. The participants included Mr. Anisur Rahman Nadvi, Mr. Ali Jasim and Mohd. Naushad Khan.