Challenges of receiving overdraft from central bank in Islamic banking

providing banks with overdraft possibility in case of liquidity shortage, is one of the most important tools that central banks usually use to manage money market and it is also used in the Iranian banking system. Having reviewed the experience of the Iranian banking system in using overdraft, this paper tries to answer this important question that: “what is the Fiqhi-jurisprudential nature of receiving overdraft from central bank?”. Using an analytical-descriptive approach this hypothesis is evaluated that: “the Fiqhi-jurisprudential nature of receiving overdraft from central bank is not clear and the challenge of Riba is available”.
The results that are based on an analytical-descriptive approach show that it is possible to suggest different jurisprudential possibilities about the nature of central bank overdraft; but all these possibilities face some challenges and hence none of them can be chosen as an acceptable solution for justifying overdraft. In addition, it is necessary to make use of the Islamic Fiqh to come up with new solutions for central bank overdrafts. Some of them are: Islamic repurchase agreements and discounting banks' documents