Evaluation of Proposed Course of Actions to Resolve the Challenge of Delayed Payment Penalty in the Islamic Banking System

In this paper, an attempt is made to expound per se on six criteria to evaluate the most important Sharia course of actions which may resolve the challenges of Delayed Payment Penalty in the Islamic banking system in Iran and other Islamic countries in toto. These criteria are de facto as follows: 1-Figh permissibility and Sharia Justification, 2-Segregation and Distinction of customers based upon their bad or doubtful debt account from those holders of good accounts, 3-Preventability, 4-Loss compensation, 5-Simplicity and 6-Designation of non-income quiddity of penalty. Hence, for this purpose, we have employed de jure, the Analytical Descriptive method. The results prima facie indicate that, none of the existing course of actions can satisfy the plausibility of these criteria as a whole, Ipso facto. Thus, the policy implication of this research denotes that, although in other Islamic countries the action of paying the Delayed Payment Penalty to charity institutions is consented by the most Figh scholars of the world and the Islamic banking systems of other countries are functioning on the basis of this framework pro rata, but the Iranian Usury Free Banking System has not come up with any comprehensive shariah compliant course of actions to resolve efficiently the issue of Delayed Payment Penalty in the context of economic and banking spheres, Sine qua non. This phenomenon will necessitate to ponder further into the lemma in the future. Besides, we have propounded that, in order to avoid and elude the charge of Riba and derive a functionless income from the Delayed Payment Penalty viz-a-viz banking network in Iran, it would be better to settle the amount in the Central Bank of the Islamic Republic of Iran or to the charity institutions, Sui generis.