Al-Gharimin Agency: A New Wing of Islamic Social Finance

Abstract

Over-indebtedness is a widespread phenomenon among households in Malaysia. This issue has become even more pressing with the economic downturns caused by the pandemic. According to the literature, Zakat institutions are focusing more on other categories of beneficiaries while give less priority to Al-Gharimin. Starting from the belief that zakat institutions are the main institutions responsible for addressing this issue, this study attempts to identify limitations and challenges facing these institutions to address excessive debt among Malaysian households. To achieve this objective, the research adopts a qualitative approach based on a desk research and semi-structured interviews with prominent scholars and experts. It was concluded that the main obstacle facing zakat institutions is the lack of funds and the pressing priority of other categories. Based on this, and other limitations, the researchers propose an Integrated ecosystem based on Al-Gharimin agency for over-indebtedness alleviation. This Agency brings together expertise and funds from different players. A collaboration between these institutions is believed to have a great impact on the efficiency in the collection and management of funds, the identification of genuine debtors and the provision of an appropriate assistance.