Sadegh Bakhtiri - Islamic Azad University , Khorasgan Branch, Isfahan

The general perception of Islamic finance is that it prohibits the practice of paying and receiving interest, but Islamicfinance is much broader than interest rate prohibition. Islamic financial services can be viewed as a set of financialservices which are diversified based on the needs of society.Since in THE Iranian Economy most of the enterprises are micro and/or small, micro financing seems to be veryimportant. Among different modes of financing which are designed in Iran’s Interest Free Banking System, QardHasan has been discussed in this paper as a way of micro financing .With a brief review of Iran’s latest Banking Act, a history of Qard Hasan has been presented and due to data availabilitythe performance of the Iran Agricultural Bank (Bank Keshavarzi) has been discussed in this regard.JEL Classification: G32, K49, N45

Keywords: Microfinance, Micro enterprise, Small enterprise, Micro credit, Qard Hasan