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Wednesday, 20 August 2014

Azerbaijan’s IBA plans stand-alone Islamic banking unit

International Bank of Azerbaijan (IBA), the country’s largest lender, is preparing to launch a separate sharia-compliant banking unit as the former Soviet state prepares an Islamic banking law slated for next spring.

A stand-alone unit would allow IBA, 50.2 per cent owned by Azerbaijan’s Ministry of Finance, to more than quadruple its 
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Islamic financing business in the country, said Behnam Gurbanzada, IBA’s director of Islamic banking.
“IBA is working on developing new products as well as establishing a platform for a separate, fully sharia-compliant unit,” Gurbanzada said.
IBA, which holds 40 per cent of banking assets in 
×
Azerbaijan, has thus far extended $180 million of 
××
Islamic financing in the country; after legislation is passed, this could increase to as much as $750 million within a year, he added.

The bank currently offers sharia-compliant products through an 
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Islamic window, a practice which allows conventional lenders to provide 
××
Islamic financial services as long as client money is segregated from the rest of the bank.
A separate unit could help increase the appeal of ×Islamic banking among retail clients, in a country where an estimated 93 per cent of the population of 9 million are Muslim.
IBA also wants to create a strong domestic ×Islamic banking platform for use with its subsidiaries in Russia, Georgia and Qatar.
“Azerbaijan shows considerable promise to become a hub for ×Islamic banking in the region and has great potential to cooperate with ×Russia and all other CIS (Commonwealth of Independent States) countries which are interested in ×Islamic banking,” said Gurbanzada.
This month, the ×Association of Russian Banks asked ×Moscow to consider ways to promote ×Islamic finance in the country, including through an industry-specific law.
IBA has hired Bahrain-based consultancy ×Shariyah Review Bureau to help in the design of several projects including a real estate development in Azerbaijan’s capital ×Baku and a cash financing product, said Gurbanzada. The bank is also developing a sharia-compliant student financing product.
(Gulfnews.Com / 18 August 2014)
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