Abstract
Qarz-ul-Hasan is considered as one of the main features of Islamic economics system. In the banking sector, scholar recommends that it could be utilized for the betterment of the economy and reduction of poverty as it will accommodate the need of the poor without extra burden of interest. In this paper the utilization of Qarz-ul-Hasan is examined in the perspective of Islamic Banks in Pakistan. It is observed that keeping in view the limitations of the industry; presently no Islamic bank is offering Qarz as a product. However in some products, like Current account, Margin Deposits, Letter of Guarantee and Documentary Credit, Qarz-ul-Hasan is being used. Structure of those products is also studied and corrective measures are suggested in the light of sharia. The study suggests that Qarzul-Hasan should be used as a tool of poverty alleviation to achieve the objective of socio economics system of Islam. The study also adds original value to the quantity of contemporary literature on Qarz-ul-Hasan.