Islamic Financing instruments in the Iranian capital market!
by Alireza Hojjatnia
This article was first published in Islamic Finance news Volume 14 Issue 45 dated the 8th November 2017.
Finding proper financing methods has always been a challenge for businesses worldwide and Iran is no exception. Attracting more and more capital with adequate rates were, and still is, a major source of controversy among almost all Iranian business owners. Restrictions on the Iranian economy reaching the flow of international funds over recent years along with the Islamic nature of the nation made it a priority for policymakers to develop financing schemes that meet businesses’ needs and that are also Shariah compliant. It is worth mentioning that there are some small differences between Shia and Sunni Shariah laws. ALIREZA HOJJATNIA explores.
Iran was the first nation to consider Islamic financing and the law of Musharakah securities issuance passed by the Iranian parliament in September 1997. However, credit for the development should be given to other Islamic nations like Malaysia and Saudi Arabia. Ratification of a brand new capital market Act in November 2005 followed which provided a foundation for Islamic finance instruments to develop further. Other bylaws focusing on specific securities like Sukuk Ijarah, Murabahah and Istisnah also went into action gradually followed by the ratification of the Law for Development of New Financial Instruments and Institutions in 2009.
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