OREANDA-NEWS. October 08, 2013. Development of Islamic banking will have great opportunities in Azerbaijan if the current legislative basis has changed, Mr.Behnam Gurbanzadeh, the head of the Islamic Banking Department of the International Bank of Azerbaijan (IBA), told correspondents.

According to him, currently IBA has a strategy and objectives with regard to the development of Islamic banking, and new products are being developed.

“But our plans are directly associated with changes and amendments to the legislation. If it undergoes relevant changes, the Islamic banking will have great future in Azerbaijan.

B.Gurbanzadeh said: – “In addition, through Azerbaijan,   the principles of Islamic financing will be extended to other CIS countries, because our country has been chosen as a platform  to develop Islamic banking.”

He stated that, within the framework of the Islamic banking, IBA has so far attracted about 200 million US Dollars. These facilities have been intended for financing trade, as well as projects, including infrastructure projects.

The department chief said “This is very little amount and makes up just 5 to 6% of the Bank’s total portfolio.  In principle, this complies with the world tendency.  Because if fixed assets in the world banking system is about 1 trillion US Dollars, just 1-to 2 percent of these funds falls on the Islamic banking’s share.”

Let’s note that currently the Islamic banking in Azerbaijan is not regulated by legislation.

The International Bank of Azerbaijan, in which the Islamic banking department functions, has been dealing with development of the relevant legislation in the country.

In particular, making changes to the existing bank and tax legislation is expected according to the plan.  Relevant package of proposals will be prepared with participation of the Islamic Development Bank (IDB) by a special task force composed by representatives of the Central Bank of Azerbaijan, the Cabinet of Ministers, ministers of Economic Development, Finance and taxes.

It is expected that the document will be ready by the end of this December, and until May 2014 will be submitted to the Milli Majlis of Azerbaijan (the Parliament)  for review.

In September 2012, IBA had announced opening of an “Islamic window” within the project of applying the Islamic banking in the country. A little later, an Islamic banking department was established at the bank, following the decision of IBA Board of Directors.

IBA’s “Islamic window” started to provide service to its customers  in April this year. The range of services being offered by the bank includes products of the Islamic banking such as lease - the analogue of traditional leasing, wakala deposit - the analogue of deposit, Islamic bank cards and opening of Card Hassan accounts.

IBA presented a new product complying with the principles of the Islamic banking, first among European banks – the Gibla card, and using this card, cashing money, doing shopping and payment of services will be possible.

The cards can be  used both in a debit mode and with a debt limit allocated by the bank.

The Gibla card will soon be put into circulation and cost 40 Manats.