Innovation of Risk Mitigation Model for Islamic Equaty-Based Financing in Islamic Microfinance Institutions in Indonesia

Islamic Microfinance institution (MFI) funded either by government or private financial institutions are playing an instrumental role in discharging business fund to the eligible micro entrepreneurs (ME). The potential of succeed their is always becoming a central issue, this due ability manage strategy sustainable manner. transacted financing industry small term quantity, therefore it also generates profit both parties MFI and ME, may not be profitable eye such as bank Baitul Mal wa Tamwil, moreover risk high because some given without proper mitigation could lead into failure. above reasons have influenced most MFIs’s decision abstain from providing equity-based financing, where concept very much suitable workable bring out groups MEs poverty list comparison debt-based financing. Equity-based require bigger commitment intervention coaching, training managing cash flow business. about loss sharing (PLS) Where bear consequences event failure would cause non-performing (NPF) effect position for that particular year report. continuous NPF can company future plan. Thus, study aimed explore mechanism which adopted microfinance around would. used suggest area governance, selection entreprenuer, arrangement, payment system sectors. applied content analysis collect history data offered BMT MFIs Indonesia, informed researcher on success story, structured interview with managers who responsible mitigation. found Indonesia well-organized, governance entreprenuer palying significant while includes collatoral against any negligence posits effective way mircofinance model.