Ma`rifat Eqtesadi

The guiding spirit in the law for intrest-free banking operations is establishment of a just,properly regulated financial system. The most important elements in this law include alteration of the resource management system, introduction of partnership and trade contracts, elimination of usury from the banking system, and replacement of the profit rate. For interest rate. With the enactment of this law in 1984, though the letter of the law was adhered to and its framework was more or less observed in official contracts between banks and their clientele, assignment of a temporary predetermined quaranteed reate of return to deposit, specification of fixed rates on credits, and degeneracy of contracts into mere formalities (e.g. sale by installment, civil partnership, and short sale contracts) are symptoms of the incomplete implementation of the law. In fact, the contemporary banking system, which was formed by the merger of 36 pre-revolution traditional banks, is not suitable for effectuation of the transactions stipulated in the law and therefore assumed a usurious form. This deviation from the law caused a sharp increase in outstanding debts to the bank. Additionally, usury is one of the chief agents of economic crises as well as unemployment and stagnation.