Baku, Azerbaijan, Feb. 28
By Azad Hasanli – Trend:
Preparation of a legal framework for Islamic finance is starting in Azerbaijan, a source in Azerbaijan’s financial market told Trend.
The work is being launched on the basis of the grant agreement signed Jan. 18 between the Azerbaijani government and the Islamic Development Bank (IDB). The IDB will allocate $200,000 for preparation of a legal framework for Islamic finance under the agreement.
“All necessary internal procedures have recently been completed and the agreement has come into force, about which the bank will be officially informed in the near future,” the source said.
After receiving an official notification, the IDB will be able to start practical implementation of the agreement, according to the source.
“At the initial stage, the bank will announce a tender to bring in a consulting company that will conduct market analysis and study the possibilities for introduction of Islamic banking principles in Azerbaijan. The rest will depend on the outcome of this work,” the source said.
Another source from a large financial company in Azerbaijan told Trend that the results of the study must be positive.
“Over the past several years, certain financial institutions have conducted a number of similar studies, which showed that introduction of Islamic banking in Azerbaijan will have a positive impact on the country's financial system,” according to the source.
The banking norms currently existing in Azerbaijan’s legislation significantly limit the possibility of using Islamic banking products due to unresolved issues on double taxation and restrictions on these products, which are connected with Islamic law.
Azerbaijan joined the Islamic Development Bank in 1992. The areas most interesting for the IDB in Azerbaijan are energy, irrigation, road construction and agriculture.