Proposed Model
Protection of purchasing power of Islamic treasury notes is considered in paragraph 5 of Note 5 of the budget law for the year 1395 (2016 – 2017), and conforming to the Regulations Governing the Listing and Offering of Islamic Treasury Notes ratified on 9 Sep, 2016 by the SEO, these notes are registered securities transferred to the buyers at par value with a certain maturity date and by protecting the purchasing power, in order to settle the government’s due debts. The period for protecting the purchasing power of Islamic treasury notes, pursuant to the Note 1 of article 2 of the enforcement bylaw, paragraph 5 of the Note 5 of the budget law for the year 1395 (2016 – 2017), is prescribed since the date of due debts and issuance of draft until the date on which the Islamic treasury notes have been issued. It is recommended that the said period is prescribed since the date of issuance until maturity date in order to protect the purchasing power of the creditors.
Shariah Board Resolution
1- In accordance with paragraph 2 of the sharia board’s approval on issuance of Islamic treasury notes, the amount of debts could not be increased on or after maturity date because of the doubt of ignorance usury. Here, it is possible to issue short-term notes equal to the amount of debt par value. The creditor shall be able to sell (at discount) the securities prior to maturity or redeem at maturity date.
2- A general jurisprudential rule is that any increase in the amount of debt against extending the maturity period is usury but if the debtor himself adds with no commitment a certain amount to his debt against delay in settlement or any other reason, it is not usury but is actually recommended.
3- As stipulated in the approval of sharia board on Islamic treasury notes, the government, may upon prediction stated in relevant regulations, may adjust the principal upwards to protect investor’s purchasing power against inflation. However, if the government desires to protect investor’s purchasing power until maturity date, it is correct and sharia-compatible.
4- Any increase in confirmed amount of principal shall be applied by the approval of the law and the Guardian Council and shall not be stated as a provision to the contract but it must be voluntarily and upon good faith. In other words, this shall be in form of a legal obligation not a legal contract between the government and contractors.
5- The Islamic Consultative Assembly may authorize the government to adjust the principal upwards to protect the investors against inflation as a good faith action until maturity date.
Session Number Session Date Description
139 Jan 04 2017


 No. 13 Mollasadra Ave., Vanak Sq.,

       Tehran 1991915814,

       Islamic Republic of Iran

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