Dr. Mesbahi Moghadam, a Member of Expediency Council, a Member of CBI’s Sharia board, gave a lecture on the position of Islamic banking in Iranian banking system on 30 Aug. 2021.

He said this title requires that all the expectations which are raised from the Islamic banking must be taken into account and Iranian banking system be compared to it in the current situation. In 1983, when interest-free banking Act was enacted by the parliament and the Guardian Council approved it, so in 1984 the law began to be enforced in Iran, it was not claimed that we were trying to implement Islamic banking, but to remove usury from conventional banking. There is a big difference between the elimination of usury and the realization of Islamic banking, and there are different expectations from Islamic banking that those expectations are not met in the implementation of interest-free banking.

Dr. Mesbahi Moghadam stated Islamic banking is not just satisfied with interest-free banking system, but there is another expectation the issue of justice in terms of the distribution of wealth in the Islamic society should be fundamental. Islamic banking supports those who have the ability to engage in economic activity, but they lack the financial resources to invest. How different this is from what is called interest-free banking.

 He mentioned another point is that the view of Islamic banking on resources and funds should be in a way that these resources are invested in the best investments, namely a kind of Investment that can turn the Islamic Republic into a developed system. Interest-free banking does not have this issue on its agenda. That is, banking is not intended to serve the development of the Islamic Republic; Of course, even interest-free banking should take steps to develop a system, namely it must look at the banking resources for the development of the country with a long-term view.

Somewhere else the lecturer stressed that “the principle of Islam must prevail and nothing is superior to Islam” must be the basis of Islamic banking. It must be implemented to make the Islamic society reach a position in which no system is superior in terms of economic power and economic prosperity to the Islamic society. We do not see that interest-free banking follows this principle in Iran.

Islamic banking must be at the service of the private sector activists and the corporative sector, not to enlarge the public sector, which is not compatible with the Islamic economy, and this is another dimension of the gap between Islamic banking and interest-free banking.

Dr. Mesbahi Moghadam highlighted in Islamic banking, the view is not for profit, but it is the view of service: serving other sections, serving especially low-income families in the community. Gharz al-Hasna must be used to finance the needy to alleviate poverty, create employment and solve problems such as treating patients, building housing and youth marriage for the deprived.

“Our today money and societies is credit money. This credit money allows the issuer of money to release more liquidity than necessary for growth, production and exchanges. This growth of liquidity exceeds production capacity, for example, 3% production growth is not compatible with annual liquidity growth between 20% and 40%. Does Islamic banking allow such an event happen? Never. The requirement of Islamic banking is not to confiscate people's property. It doesn’t wisely and consciously reduce the purchasing power of people's money and doesn’t do anything to destroy people's wealth” he siad.