Microfinance Yunus), are that credit is a fundamental

Microfinance aims to facilitate financing for micro-entrepreneurs and poor debts through small loans. The terms and conditions of these loans are generally easy for everyone to know. Furthermore, loans are granted without any guarantee  are generally based on trust. Taking into account the characteristics of microfinance, it is considered different for micro-entrepreneurs who are not eligible for loans from commercial banks. Therefore, to obtain loans among the group members, the borrowers only have to join the micro-credit beneficiary group. Thus, the condition of the new small loans will be granted once the previous loans have been repaid.The basic principles of microfinance, introduced by the founder of the Grameen Bank of Bangladesh (Dr. Muhamad Yunus), are that credit is a fundamental human right. The main task of microfinance is, therefore, to help the poor to be economically independent, given that their skills are underutilized. However, charity is considered an ineffective process to eradicate poverty, which will generate dependence and lack of initiative among the poor. In this sense, many foundations of microfinance could be considered with the more general objectives of Islamic finance. Thus, these are the differences between microfinance and Islamic microfinance that will influence their performance.Proponents of conventional microfinance alternatives claim that the provision of equity financing through products that conform to Islamic religious law (Sharia), promote the social status of local Muslim communities (Abdul Rahman, 2007). Using a sample of three Islamic MFIs operating in Bangladesh, Ahmed (2002) found that Islamic MFIs performed better than a conventional  microfinance institutionThe conventional microfinance has a process of microfinance institutions, among these criticisms, because the high rate of interest is charged to the poor who receive it to obtain financial benefits for these institutions. On the other hand, Islamic microfinance uses Islamic financial instruments that are based exclusively on patterns of participation in the profits and loss. While conventional microfinance institutions focused only on women as their clients, supporters of Islamic microfinance claim that Islamic MFI should be involved with the whole family.