Iran Banks are operated under strict Islamic principles as the country’s government mandates to follow the strict Islamic principles. Therefore, running a traditional banking network would be considered as against the fundamental teachings of Qur’an. It became compulsory for the Central Bank of Iran to set up an Islamic Banking law in tune with the instructions of Qu’ran following the Islamic Revolution.
In 1983 the Islamic Banking law of Iran was passed by the Islamic Majlis of Iran. According to this law,
Iranian banks can only engage in interest-free Islamic transactions because interest is considered as usury and is forbidden by Islam and the holy book of Qur’an. The banking system in Iran adheres to Islamic rules that prohibit earning or paying interest. Therefore, Iran banks execute commercial transactions that involve exchange of goods and services in return for a share of the assumed "profit".
Iran uses what are officially termed as "provisional" interest rates, as rates paid to depositors or received from borrowers should reflect the profits or losses of a business. The government of Iran has made the details of these contracts and related practises available in the Iranian Interest-Free banking law and its guidelines. This law describes and authorizes an Iranian Shiite version of Islamic commercial laws. All such transactions are performed through Islamic contracts, such as Mozarebe, Foroush Aghsati, Joale, Salaf, and Gharzol-hassane.
In the backdrop of this banking system in Iran and recent international political developments, especially a change in US leadership, it is said that Iran is going to be a huge market opportunity. President Obama’s friendly initiative with Iran sends out the message that the world’s economic power is eager to shake hands with Iran.
Also, demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has increased in recent time. The assets that comply with Islamic law are estimated at between $700 billion and $1 trillion. Thus, it is indeed doubtless that Iran is emerging as a huge opportunity for the world economy.
Please Read More About:
Financial Sanctions Practice - UN, EU, UK Financial Sanctions, Iranian Sanctions HM Treasury
Iranian Sanctions Banks - Are you customer of Persia International, Bank Saderat, Bank Mellat, Future Bank?
Author: John Smit
Pindoria Solicitors has not written this article and hence takes no responsibility or liability for it. Please contact the author directly to know more about Iran banks.
