Philosophy of Akhuwat

Akhuwat derives its name from ‘mwakhaat’ or brotherhood, the earliest example of which was seen in the fraternity formed by the Ansars (citizens of Medina) and the Muhajireen (or Meccans) who had migrated to Medina to escape religious persecution. Inspired by the spirit which induced the Medinites to share half of their wealth with the migrants, Akhuwat seeks to invoke this very concept of brotherhood through its operations. For Akhuwat, the metaphor of brotherhood entails the creation of a system based on mutual support in society. To this end microfinance is only one of the tools, albeit a powerful one, being employed by Akhuwat.

One of Akhuwat’s primary deviations from conventional microfinance is that it charges no interest rates. Akhuwat has sought to base its movement on the principles of Qarz-e-Hassn found in the Islamic tradition which entails helping someone in need with interest free loans, a practice favored over charity and doles. While drawing on the tradition of Qarz-e-Hassn, Akhuwat has over time incorporated many of the best practices and lessons learnt from conventional microfinance movements from across the globe as well.

In the absence of interest rates and minimal registration fee (in 2011, the registration fee was Rs. 100), every effort was made to ensure operation costs were kept very low. Extreme simplicity in operational activities, plain offices, use of religious places, high levels of volunteerism in the workforce ensured that Akhuwat realized its aim of minimal operational costs. To complement the efficient operational strategies of the organization, four core principles were identified;

  • Interest free loans
  • Use of religious places
  • Spirit of volunteerism
  • Transforming borrowers into donors

These principles in time became the defining features of the Akhuwat Model.