Prospects of Islamic Microfinance: A Study in India

India being a developing economy is one of the emerging markets in the world. But an obstacle that still stands in its way of development is the scarcity of financial/monetary resources required for sustainable investments. The giants of Microfinance in India are known to be charging high rates and the smaller players follow in their footsteps. For such regions, Interest-free microfinance is what is needed to uplift the minority and take them out of the fangs of poverty. Interest-free microfinance and its implementation can prove to be very useful in eradicating poverty and providing sustainable development of micro-enterprises and the expansion of financial inclusion. Thus, the aim of this study is to examine the prospects of Islamic microfinance in India. The quantitative method is employed, and primary data is collected through a questionnaire. The probability sampling method is used. Out of 500 questionnaires disbursed, 303 are received. The result of the questionnaire shows that majority of the public believes Islamic Microfinance Institions (IMFIs) will aid the poor financially, poverty will be alleviated, it will be beneficial to the society, and will help micro SMEs become more developed. Similarly, majority of the respondents also agreed to IMFIs being ethical, meant for all religions, catering to the needs of the society and help to extend loans without collaterals. This reflects that Islamic Microfinance holds great potential and prospects and will be widely accepted by the public and also the Indian market. Policymakers should consider IMFIs, establish guidelines and promulgate them as this can pave way to a financially more stable India. The limitation of the study is that the outreach was among people with access to the internet. Therefore, perception of those in rural areas, people with no internet and education could not be included. Hence, future research will fulfill this lacuna.