Azerbaijan’s IBA refuses to provide Islamic financing instruments
By Gulgiz Dadashova
Azerbaijan’s top bank, the International Bank of Azerbaijan, has decided to liquidate the Islamic financing department, Behnam Gurbanzade, the head of the liquidated department announced.
“The IBA will not provide Islamic banking services,” he told Trend, adding that the decision on liquidation of the department was made last week.
By late 2015, the department was planning to introduce new products and services, primarily those for the financing of small and medium-sized businesses in the regions of the country. The department also planned to allocate long-term loans designed for each industry, pay particular attention to agriculture as one of the main areas that should be developed and introduce certain forms of financing for the construction, light and food industries.
The Bank started rendering Islamic banking services in 2003, becoming the first in the country's banking market. The bank has been providing services in this sphere with the resources attracted from the Islamic Development Bank group.
In September 2012, IBA announced the launch of “Islamic window” created within the project on introduction of Islamic banking in Azerbaijan. Later, the department of Islamic banking was established in the bank by the decision of the IBA. The range of services offered by the bank include Islamic banking products such as Ijara which is an analogue of the traditional leasing, Wakala deposit equivalent to the traditional deposit, Islamic banking cards, Qard Hassan cards.
The IBA was founded in 1992 as the successor of the Vnesheconombank's Azerbaijani branch. The IBA holds the dominating position in the country's banking sector. The bank's main shareholder is the Azerbaijani government, which owns a 50.2 percent share. The remaining shares of the bank are owned by private individuals and legal entities.
The bank's portfolio in Islamic financing amounts to nearly $526 million.
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