Azerbaijan to issue first Islamic plastic cards
Azerbaijan, Baku, March 7 / Trend I. Khalilova /
The International Bank of Azerbaijan (IBA) discusses the possibility of issuing Islamic cards with Visa and MasterCard, told Trend on Wednesday, head of the working group on Islamic banking introduction in the IBA Behnam Gurbanzade told Trend today.
"Each of the payment system considers issuing and servicing of plastic cards in accordance with Sharia law," Gurbanzade said.
The advantage of these bank cards is in the fact that they do not bear interest. A grace period is set. A client uses an interest-free card. Accordingly, he pays only for purchasing and servicing the card. A fixed fee will be charged.
"It is assumed at the primary stage that the Islamic bank cards may be on the same level in price or slightly cheaper than usual to attract customers," Gurbanzade said.
The main difference of Islamic cards is that the money placed in the accounts of the owners do not participate in transactions prohibited by Islam. The basic principle of Islamic financing is non-extra fee in interest on loans and deposits. Islamic finance is generally shunned by hedge funds, any risky debt transactions and private shares, because these funds increase cash draining the assets.
At present, the number of IBA active cards reaches 1,865,712 units or more than 40 percent of the card market in the country. Last year, there were 103,683 IBA cardholders.
Over the past year, the turnover of IBA card transactions was 2.5 billion manat. The number of IBA cards was 28,000 units in 2002, and sales operations with the cards hit $71 million.
During 2011 the bank established ATMs in 25 settlements and POS-terminals in 983 trade and service centers of the country. There are 630 ATMs and 3795 POS-terminals in the country as of the reported period, or 34 percent of ATMs operating in the country, and 41 percent - POS-terminals.
The International Bank of Azerbaijan is a quasi-bank. Its main shareholder is the Azerbaijani government, which owns 50.2 percent stake, while 49.8 percent of the shares are owned by private physical and legal entities.
Official exchange rate on March 7 is 0.7863 AZN/USD.