The Central Bank of Iran on Tuesday unveiled a supervisory platform for monitoring the operation of Qarz al-Hasanah (usury-free) funds.
The Qarz al-Hasanah Comprehensive Network, or Shafaq in Persian, is developed in line with the Money and Credit Council's requirements.
"It supplies the funds modern tools and services to improve their performance while offering the CBI the prospect for live monitoring of funding operations," a press release on the CBI website said.
The CBI has been inclined towards using Qarz al-Hasanah finance to enhance financial inclusion and improve financial services across the country.
The system provides the funds with a range of services, including issuance of relevant documents, reporting, loan management, keeping track of customer finances and data access.
According to the CBI, all the usury-free funds will adopt the new system gradually.
According to Nematollah Karimi, head of CBI department for supervising financial institutions, 3,000 such funds operate in the country.
However, "the CBI has no clear information about their operations and does not even know the exact location of 1,500 funds."
With the new platform, the CBI wants to improve and expand its oversight of all funds.
According to Karimi, nearly 900 funds are authorized by the Islamic Economy Organization, 79 have a permit from the CBI and some have more than one branch.
Interest-free lending have been a popular micro-financing method in Iran for almost four decades. Lenders give small loans to customers using their own resources, interest-free deposits and donations.
Loans by banks and credit institutions are mostly larger and offered at 18% rendering interest-free funding a practical alternative for the common man, especially those at the lowest rung of the society.
