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Legal basis of Islamic banking in Azerbaijan depends on IDB

BAKU /Trend/ - Completion of work on the legal basis for the regulation of Islamic finance in the country depends on the signing of the agreement between Azerbaijani government and Islamic Development Bank (IDB), Mr.Behnam Gurbanzadeh, the head of the Islamic Banking Department (IBD) IBA, told Trend on Monday.

“Now we are waiting for the signing of the agreement between the government of Azerbaijan and the IDB on the issuance of the grant in the amount of 200,000.00 (two hundred thousands) USD for the completion of the legal basis and processes for the implementation of banking legislation for Islamic finance activities in the future. At the expense of funds allocated by the IDB, specialists - first of all, lawyers who have knowledge and experience in the field of Islamic law, auditors, checking Azerbaijani financial system and making final decision, and specialists of the department of Islamic Banking of the International Bank of Azerbaijan, will be involved. This contract is not signed yet and therefore, works are delayed”, said B. Gurbanzadeh.

According to him, at present, this issue is discussed by the working group on the results of the technical proposals in the contract signing of the agreement. CBA, IBA Islamic banking legislation in the field of preparation of the working group will include representatives of the ministries of finance, taxation, economic and industry, and the cabinet of Ministers.

“All the work has been done by the Islamic Banking Department, action plan, certain products to be provided in future, legal basis and paragraphs are prepared. So, we will immediately start working in this direction as we get the “green light”. The project currently is on, but this pace is not enough for hand over the project in September”, said B. Gurbanzadeh.

Existing Law in the Banking sphere restricts the ability of realization of Islamic banking products significantly, because of unsolved issues regarding double taxation, including restriction of interest rates and their definition, banned operations in different areas, mortgages and etc., in compliance with the Shariah, Islamic law.

“Making amendments to the legislative acts will give impetus to the activity of IBA and the development of Islamic Banking in Azerbaijan generally”, Gurbanzadeh emphasized.

The International Bank of Azerbaijan was established in January 1992. The bank’s main shareholder is the Azerbaijani government, which holds 51.07 percent of shares while private individuals and legal entities hold the remaining 48.93 percent.

IBA started rendering Islamic banking services in 2003, becoming the first in the domestic banking market. The bank has been providing services in this sphere with the resources attracted from the IDB group.

IBA announced the launch of "Islamic window", created within the framework of the project on introduction of Islamic banking in the Azerbaijan in September 2012. Later, the Islamic Banking Department started its activities as a separate unit of the Bank based on decision of the IBA Executive Board. "Islamic window" of the IBA began providing services to customers in April. The range of services offered by the Islamic Banking include such Islamic banking products as Ijara - analogue of the traditional leasing, Vakala deposit - analogue of the traditional deposit, Islamic banking cards, opening Gard Hassan accounts.

Islamic Banking portfolio of the IBA is 526 million US dollars.

ibaislamic.az

Added:17 August, 2015 07:06, Views:945, ]]>Print]]>
 
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