Future prospects for the implementation of the Istisna’ contract in the Islamic banks in Iraq

The Istisna’ contract has wide applications to finance the general needs and vital interests of society. It can be applied in high-tech and infrastructure industries. Modern application of the Istisna’ contract can be developed by implementing Parallel Istisna’ through Islamic financial institutions. However, this request must comply with strict procedures, so the contract will not turn to be a usurious transaction. This research aims to outline the framework of the Istisna’ contract pointing on its future prospects and implementation in the Islamic banks in Iraq. The research problem of this study stems from the failure of the Istisna’ contract application in the Iraqi Islamic banks, despite the success of this type of financing in industrial and contracting projects. The study adopted the descriptive approach to present the research problem and its theoretical aspects, and the qualitative approach based on interviews (semi-structured) to collect primary data and provide potential solutions for the application of the Istisna’ contract. The study revealed that the Istisna’ contract is a legitimate contract, however Islamic banks in Iraq don’t implement it currently due to its great risks represented by default and wrong implementation, but the Islamic banks in Iraq have a good future vision towards the Istisna’ contract in the event of the state or (the Central Bank) assistance in guaranteeing risks. The study also concluded that the application of the Istisna’ contract by the Iraqi Islamic banks will lead to tremendous development that contributes to the adoption of large and strategic projects. The researcher recommends providing studies to measure and evaluate the risks associated with financing the Istisna’ contract to ensure profitability. The Iraqi Islamic banks should implement the Istisna’ contract as an important legitimate financing tool, in addition to holding workshops and scientific seminars to demonstrate the applications of the Istisna’ contract for the purpose of preparing banking cadres.