Application of Morabeha in Usury Free Banking System

According to Article 98 of the Fifth Development Plane, the Morabeha Contract has been added to the section designates as methods of allocation of resource in Usury Free Banking Operation Law. Following that, the Council of Ministers approved the regulation of Morabeha Contract and notified it to the banking system. Subsequently, the Central Bank of Iran by preparing and notifying the executive direction for implementation of Morabeha Contract, has suggested the issuing of credit card based upon the principle of Morabeha Contract and also issuing the Mizan credit card in accordance with the tenet of Morabeha Contract and consider them as new instruments to be utilized in Usury Free Banking System. Thus, it seems that the appropriate application of these instruments can open new vista for banking industry of this country, and pave the way for more compatibility with the real economic needs of the society. In this paper, we have attempted to survey the legal and jurisprudential foundation of Morabeha Contract and its regulations and verify the basic differences of this type of Contract with prevailing Sale Installment Contract. We also tried to show its proper application for extension of facilities to various sectors. Moreover, we have examined the special capability and efficacy of Morabeha Contract to act as a credit card for purchasing the required goods and services.