Azerbaijan, Baku, March 7 / Trend I.Khalilova /
International Bank of Azerbaijan (IBA) negotiates with Islamic financial institutions to draw funds to develop "Islamic window" in the bank, IBA first deputy chairman Emil Mustafayev told Trend today.
"The negotiations are being held with the Islamic Corporation for Private Sector Development, which is part of the IDB group of companies, Islamic banks from the UAE and Turkey," Mustafayev said.
All institutions take a wait-and-see attitude before the IBA separate department is opened to deliver products and services of Islamic banking.
"But now we are focused not only on external resources," he said. "Local corporate clients' and physical entities' interest in Islamic banking has been significantly increased."
He said that the bank's customers are interested in keeping own money in IBA "Islamic window" and actively using the products and services of Islamic banking.
"It is difficult to make any predictions about the volumes and the amounts of borrowed funds," he said. "But according to the Islamic window development concept, we plan to triple the volume of current transactions during the first two years, and thereby increase the portfolio to $60 million.
IBA also hopes to make changes and additions to the existing legislation.
"These changes will allow us to fully introduce Islamic banking, to serve all customer segments, including private individuals, as well as to cover the Azerbaijani regions," he said.
At present, the IBA has developed seven products of Islamic banking, which can be brought to the Azerbaijani market, while respecting the law. Gurbanzade said this line includes products to improve and maintain the liquidity of the bank, such as trade in financial instruments in international financial Islamic markets, products for consumer lending in the country (financing the purchase of cars, mortgages), financing the business (the bank will act as agent and counterparty to finance projects of local entrepreneurs), the financing of major projects of state companies, trade finance, two deposit products, as well as Islamic plastic cards.
The IBA began to provide Islamic banking services in 2003, becoming the first in the country's banking market. Bank offered services in this area due to funds from the IDB Group, and at present under the Islamic financing portfolio of IBA is over 10 million manat.
A consortium of companies Salans, KPMG, Pinsent Masons and the Dar al Shariah assists in the creation of specialized structures for the provision of products and services of Islamic banking of the IBA.
International Bank of Azerbaijan was established in 1992 as the successor of the Azerbaijan branch of "Vnesheconombank". IBA holds a dominant position in the country's banking sector. The state share in charter capital of the bank is 50.2 per cent, the remaining shares are distributed among private legal and physical entities.