The Islamic Development Bank (IDB) has allocated a grant worth 200,000 USD for the Azerbaijani government to introduce Islamic banking in the country, Tamerlan Taghiyev, representative of the IDB group in Azerbaijan, said, Trend reports on Oct. 7 referring to the Azerbaijani Taxes Ministry’s website.
"The Azerbaijani Agency for the Development of Small and Medium-Sized Enterprises was selected as coordinator of the project," he said.
"Some work related to the project has been carried out," Taghiyev said. "This includes a joint venture created by IFAAS and EKVITA companies. They explore local legislation and recommend steps to introduce Islamic banking in Azerbaijan."
While clarifying the issue of the way of the Islamic banking creation, he said that two options were proposed to form a new banking.
"The first option is to develop a separate law on Islamic banking," Taghiyev said. "Another option is to create opportunities for introducing key Islamic banking products by introducing certain changes to the current legislation. Thus, it will be possible to open the Islamic banking window in existing banks."
"The choice will depend on the decision of the government," he said. "Islamic banking is a necessary system that allows using alternative financial mechanisms. We think that the country has enough potential for this."
Islamic banking envisages interest-free deposits and loans. However, the investments are not worthless and are based on the principles of partnership with losses and profit.
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