Legislation and Case Law: Provisional Profit in Iran's Banking System: Same Meat, Different Gravy
The foundation of an Islamic country and the implementation of Islamic laws were the primary goals of the Iranian Islamic Revolution of 1979. Many laws and regulations were changed and revised in order to conform to Shari’ah law. Therefore, one of the most critical laws adopted after the Revolution and rooted in Shari’ah law, which strictly forbids riba (interest), is the Riba-Free Banking Act of 1983. After three decades, a case can be made that it is has not been entirely successful in eliminating riba from Iran’s banking system. While all Iranian banks allegedly follow the prohibition of riba, in practice they cannot afford to fully adopt the Islamic doctrine in this manner. With practical work experience in a financial institution in Iran, I thoroughly understand the distance between theory and the reality of the riba-free banking system in Iran. Specifically, with study and review of term investment deposit accounts, we argue that post-revolutionary changes in the banking system of Iran did not result in the so-called elimination of riba from Iran’s financial structure. Iranian banks continue to pay a fixed and predetermined interest in the form of a new phrase: provisional profit.