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Islamic Finance Muslims in India develop mutual health insurance scheme as alternative to takaful

Islamic finance pioneers and like-minded community leaders in India have come together to introduce an alternative product to formal takaful, which doesn’t exist in the country.

A not-for-profit health assurance scheme, called Uplift Mutuals Biradaree, started in April this year at two of Mumbai’s Muslim-majority localities, Kurla and Malad. The scheme works on the model of mutual assurance, with certain features maintaining the values of Shariah-compliant finance.

“The mutual health assurance model by design works on the principles of takaful in which people contribute an agreed amount to a common pool to support each other and share risk,” Dr. Shariq Nisar, an Islamic finance academic and professional who helped develop the scheme, told Salaam Gateway.

There is no trading of risk in a mutual scheme, hence no conflict of interest between the insurer and the insured.


The scheme works on the principle of ‘prevention is better than cure’ where steps and precautions are taken to avoid illness in the first place. “It’s not a normal insurance but a health service plus financial aid support,” said Dr. Nisar.

“Monthly clinics are organised in the localities, and doctors are made available on call 24x7. But if one still falls ill, the mutual helps in getting the right treatment and the right doctors at the right price,” he added.

The health assurance scheme will work on the existing platform of Uplift Mutuals, a fifteen-year-old community-owned mutual health assurance model developed by Uplift India Association.

Uplift Mutuals has set up about nine such ‘mutuals’ that cover over 300,000 urban and rural poor in the states of Maharashtra and Rajasthan.

With the new scheme, one of the issues needed to be resolved was that the funds raised would need to be deposited into a bank account that would generate interest income, as India does not have any Islamic banks.

“We have decided to place the funds in a separate current account so that any incidental interest earned from it can be purged,” said Dr. Nisar. 

The scheme will now have new Shariah-compliant features to reach out to Muslims.


Uplift Mutuals Biradaree is designed to be affordable and is open to all financially vulnerable families, and not just for Muslims.

A single member pays 700 Indian rupees ($10) per annum and a family of four 1,400 rupees per year.

The annual contribution has been kept low because part of the capital and operating expenditures are currently met by external funding from the global industry body the International Cooperative and Mutual Insurance Federation (ICMIF).

As part of its 5-5-5 Mutual Microinsurance Strategy for India, ICMIF has partnered with Uplift India Association to deliver mutual assurance coverage to half a million people over the next five years.

ICMIF has 280 members and it is owned, governed and guided by its member organisations, two of which - The Co-operators, Canada, and L?nsf?rs?kringar AB, Sweden - are providing financial and technical assistance to Uplift India.

Dr. Nisar said that when ICMIF studied the Uplift Mutuals model, they realised it worked in line with takaful. “We thought if we could add the Shariah screening features to Uplift Mutuals, we could develop an alternative to takaful that would be acceptable to the wider Muslim community,” he said.

“There is no gharar (uncertainty), maysir (gambling), or riba (usury) involved.”

Posted Date : 30 May 2018

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