A single-urgency motion to amend the usury-free banking law was proposed jointly by juridical and economic committees of the parliament, Banker news website reported on Monday. The law was approved in 1983.
Both the government and parliament have been working on a plan for the past recent years to amend the current law. The new proposal aims to allow the investment institutions, instead of banks, to sign participatory contracts based on the Islamic law if they are to provide funds for manufacturing activities, the website said.
The proposal objective is to make the banks abandon their non-banking businesses; however, they can still purchase stocks issued by the investment institutions.
If approved, the motion will require producers to go to the investment institutions instead of banks for being financed. In fact, banks are expected to allocate their resources to the manufacturing sector, rather than staying focused on speculative activity. At present, commercial banks are mainly involved in different kinds of non-productive activities especially in the services sector, involving themselves in leasing, insurance, foreign currency exchange, auto and housing market, the activities which are expected to be restricted to a large extent if the motion is endorsed by the parliament.
