Iran is one of the pioneers of Islamic finance. In 1983, four years after the revolution led by Ayatollah Khomeini overthrew the Shah, the Islamic government passed the Riba-Free Banking Act, forcing local banks to rebuild their business around sharia-compliant products.
More than 30 years on, the Iranian banking industry remains completely regulated by sharia law and is by far the world’s largest center of Islamic banking. Yet its experience is unique within the global Islamic community, as it is inspired by Shia jurisprudence, which often diverges from mainstream Sunni jurisprudence. Sunni scholars have repeatedly questioned the “rightfulness” of Iranian banks, with some even claiming that they “are merely carrying Islamic labels and are rather dummy version [sic] of Islamic banks,” to put it in the words of a paper published by the International Islamic University of Malaysia (IIUM).
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