Azerbaijan's largest bank plans to increase investments in Islamic finance
Baku, Azerbaijan, July 30
By Zulfiyya Gurbanova - Trend:
International Bank of Azerbaijan (IBA) plans to increase its total investment compared to last year due to the increasing demand for investments that comply with Shariah norms, Director of the Islamic Banking Department of the IBA Behnam Gurbanzade told Trend.
Today, the total amount of IBA`s raised funds from the financial institutions is $218.7 million, he said.
"The bank periodically holds negotiations to raise additional funds. However, the final amount will be announced after the parties will approve the terms of the contract," he noted.
The IBA does not stop efforts to attract foreign loans for Islamic finance in the country, according to the department director.
"However, there are obstacles to attract large amount of investment, and it is all the result of the absence of the country's legal framework in the field of Islamic banking. It is difficult to direct the steady flow of investment in the right direction, without an appropriate legal framework. The products and services had to be structured constantly which ultimately increases bank charges and is reflected in the cost of investment," Gurbanzade said.
As the head of the department said the share of Islamic banking in the total loan portfolio of the IBA, amounts to 5.695 billion AZN as of July 1 of the current year and makes up 3 percent.
The IBA has big plans to expand the range of Islamic products, according to Gurbanzade.
"In particular, the bank is going to issue a new Islamic "Murabaha" plastic card in a few days. This is a trade financing card and the holder can make their purchases in retail stores serviced by the IBA. The cardholder will have the opportunity to receive discounts and interest-free credit lines. This is the third product of the bank on the Islamic rule of plastic cards following "Qibla" and "Jasmine" cards," Gurbanzade said.
The expansion of the Islamic products line of the IBA through units in foreign countries is a matter of the future, according to the head of the department.
"Every market has its own specific characteristics and its special demand for a given period of time, without a thorough study it is unreasonable to enter these markets without the appropriate products," he added.
Furthermore, the IBA develops new products and services within the mortgage financing and lending to real business through investments in small and medium business, according to Gurbanzade.
The International Bank of Azerbaijan started providing services in Islamic banking last April.
Today the total volume of assets without the framework of the Islamic financing exceeds $180 million. The IBA`s department of the Islamic baking provides services for corporate clients and individuals. The bank carries out active work in the sphere of improvement of legislation. The working group which includes the IBA specialist and the representatives of a number of miniseries and governmental enterprise, prepares a package of proposals for the regulation of Islamic banking in Azerbaijan.
The International Bank of Azerbaijan (IBA) was founded in January 1992. The IBA is the largest bank in the country. The bank's main shareholder is the Azerbaijani government, which owns a 50.2 percent stake, while 49.8 percent of the shares are owned by private shareholders.
The official exchange rate is 0.7842 AZN/USD on July 30.
Edited by CN