Islamic Lifestyle

Helping Muslims save for the haj: National schemes in Indonesia, India, Nigeria

FILE PHOTO: A Muslim pilgrim prays as she gathers with others on Mount Mercy on the plains of Arafat during the annual haj pilgrimage, outside the holy city of Mecca, Saudi Arabia, August 20, 2018. REUTERS/Zohra Bensemra

Increasing costs make the haj expensive for many people who often save for years to be able to fulfil this religious obligation.

In countries where there are no, or inaccessible, haj savings schemes or Shariah-compliant financial institutions, a lot of Muslims often save money in an unsystematic and unproductive manner, such as stashing cash under the bed, in a pot or in a bank locker, which means a huge amount of money remains stagnant without generating economic activity.

Addressing this, Malaysia pioneered the national haj savings scheme when it introduced its pilgrims fund board in 1963. Lembaga Tabung Haji is seen by many as a model national haj savings scheme and investment fund but other countries are not able to replicate it completely due to their different political and economic contexts.

Three countries with significant Muslim populations—Indonesia, India and Nigeria—have devised different ways of helping intending pilgrims save for the haj.



Indonesia is home to around 220 million Muslims, making it the country with the biggest Muslim population in the world.

After a two-year delay, the country’s government-run haj fund agency was dismantled in 2017 and its operations transferred to an independent body, the Badan Pengelola Keuangan Haji, or BPKH for short. The move was aimed at increasing transparency and profitability for the fund.

BPKH is now collaborating with several Islamic banks to manage the 104-trillion Indonesian rupiah ($7.6 billion) haj and sovereign wealth fund. Like Malaysia’s Tabung Haji, BPKH manages the fund as both a savings and investment vehicle.

“We have appointed 28 Islamic/Shariah-compliant banks as our partners through six types of partnerships. Some of them were appointed as receivers of prospective hajis, and some as investment partners,” Dr Muhammad Akhyar Adnan, member of BPKH’s supervisory board told Salaam Gateway.

Indonesia’s haj saving scheme requires that prospective pilgrims deposit money in any of the appointed banks. When the savings reach 25 million Indonesian rupiah ($1,687), the account holder would be allocated a haj place and informed of the tentative year of departure.

“The first deposit is 25 million rupiah and the balance is decided on the year of departure. For example, this year, every prospective haji has had to pay on average another 10 million rupiah,” said Dr Adnan.

Some four million Indonesians currently have virtual haj accounts, he added.

BPKH is looking at different mechanisms to increase haj fund investment yields, in line with the government act number 34/2014 that allows it to invest in Islamic banking products, sukuk, gold, direct investments, and equity placements.

Returns from the deposits and investments will be used in three ways, according to Dr Adnan.

Firstly, to subsidise the haj cost, which currently stands at around 35 million rupiah. Secondly, five percent will be spent on BPKH’s operational expenses, and the rest will be returned to the prospective pilgrims’ accounts.


India has a substantial minority Muslim population of around 172 million. Islamic banking is not allowed.

The Haj Fund of India (HFI), a unit of the Zakat Foundation of India (ZFI), established a haj fund in 2010 to utilise savings from intending pilgrims for social uplift, targeting multi-faceted Shariah-compliant investment projects.

“80 per cent of the Indian population lives in villages. Mostly, they don’t have access to banks in close vicinity. Hence, most of the intending pilgrims keep their savings at home where it remains unproductive and unsafe,” Dr Syed Zafar Mahmood, president of the Zakat Foundation of India and chairman of the Haj Fund of India told Salaam Gateway.

Prospective pilgrims can deposit their savings in multiples of thousands of rupees at a time, at any Bank of India branch. Once they inform HFI that they are ready for pilgrimage, the funds are returned to them or they can be remitted to their travel agent.

“The HFI bank account in the Bank of India has been dedicated for this work. But, ZFI has accounts in the State Bank of India, ICICI Bank, Central Bank of India, Jamia Co-operative Bank and Janta Co-operative Bank. So in effect, the money deposited anywhere in India is easily remitted in the ZFI/HFI account,” explained Dr Mahmood.

Currently, an amount ranging from 213,000 Indian rupees ($2,936) to 247,000 rupees ($3,405), depending on the chosen category of accommodation, is required for performing haj, he said.

During the period when the money remains with HFI, it uses part of the funds to help poor Muslims by providing short-term, interest-free microfinance loans - for example enabling a rickshaw puller to buy a rickshaw instead of paying daily rent to its owner.

“The ZFI is a charitable trust registered under section 80G of the Income Tax Act and it utilises its funds for helping out the poor and the needy,” said Dr Mahmood.

“The donors get a 50 percent deduction on the donated amount under the Income Tax Act. They also get spiritually rewarded because their amount, before it is finally withdrawn, is used for helping the poor in their income-earning projects.”

Funds managed by the HFI and ZFI are kept Shariah-compliant.  

“The most important thing is that we make sure nothing goes against the Shariah. For that, we have a consultative committee of ulama (Muslim scholars) from India and the rest of the world, who supervise and evaluate the foundation’s operation from time to time and make sure that nothing is un-Islamic.”

The 16-member committee meets at least twice a year to examine ZFI and HFI’s operations, and any recommendations are recorded, Dr Mahmood said.


As the pioneering national haj saving scheme, Malaysia’s Tabung Haji currently manages more than 73 billion Malaysian ringgit ($17.6 billion) of deposits. The fund facilitates savings for the haj by investing in Shariah-compliant vehicles, allocating 53 percent of its assets to equities, 27 percent to fixed income, 15 percent to properties and the remaining 5 percent to cash.

Tabung Haji is considered a model national haj savings scheme and investment fund but countries like India and Indonesia are not able to replicate it completely due to their different political and economic contexts.

Haj Fund of India’s Dr Mahmood said that Tabung Haji has a much wider scope and national ideological support compared to India’s scheme. For instance, parents would open an account with Tabung Haji after their child is born, and it is part of the culture to remit money in such accounts.

Also, an account in Tabung Haji facilitates personal investment in non-haj avenues. However, India is not a Muslim-majority nation, hence many of these features are not available in its haj fund.

BPKH’s Dr Adnan highlighted Tabung Haji is given a much broader mandate than Indonesia’s haj fund agency.

“Our Act in Indonesia rules BPKH for investment in certain avenues only and sets the limit percentage accordingly, while the Tabung Haji is given a broader way to manage the funds,” said Dr Adnan.

“In other words, our investment portfolio seems to be less flexible as compared to Tabung Haji Malaysia,” he added.

He stressed that Malaysia's Tabung Haji was established in 1963, or about 55 years earlier than BPKH.

“BPKH must learn from Tabung Haji.”


Nigeria is home to Sub-Saharan Africa’s largest Muslim population, with around half of the country’s estimated 186 million population being adherents of Islam.

The national haj commission NAHCON recently established its Hajj Savings and Investment Scheme, and directed all State Pilgrims Welfare Boards to register those who wish to perform haj in the next five years.

Prospective pilgrims can start with any amount no matter how small and continue to contribute until their year of intention arrives. They can then top up the amount if there is a difference, or if the money has yielded enough profit, it will be used to balance the amount needed for the haj trip.

NAHCON is currently in the process of setting up a board of trustees for the savings scheme, comprising of individuals who are not members of the commission.

All deposits will be channelled into the Nigerian economy and both pilgrims and the government body regulating haj activities will get a portion of the profit, NAHCON executive chairman Alhaji Abdullahi Muhammad told the state-owned News Agency of Nigeria in July.

He said the scheme would ensure financial autonomy for the commission and would be run like a microfinance institution, with money from the savings to be invested in specific projects and profits shared in line with Islamic principles.

“We should not just embark on pilgrimage to spend money, but we should also explore the possibility of bringing something of economic value back to the country,” Muhammad told local press earlier in March.

(Reporting by Heba Hashem; Editing by Emmy Abdul Alim

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