BAKU, Azerbaijan, July 10. Non-bank credit
institutions (NBCIs) are expected to provide only Exception,
Murabaha, and Ijara products in Azerbaijan, Executive Director of
the Central Bank of Azerbaijan (CBA) Shahin Mahmudzade told
Trend in an
exclusive interview.


The executive director shared his views on the regulatory,
legal, and institutional measures taken by the CBA towards the
development of Islamic finance. In addition, he spoke about the
stage of preparatory work for the introduction of Islamic banking
products from 2026, and which products will be launched on the
market in the first stage.


"For the purpose of implementing Islamic banking, a draft of
amendments to the Civil Code, the Tax Code, the laws of Azerbaijan
'On banks', 'On non-bank credit institutions', 'On state duty', 'On
credit bureaus' and 'On privatization of state property' has been
prepared and submitted to the relevant state bodies.


The draft amendments have been prepared taking into account
international experience and have been adapted to local
legislation. The goal is to implement international standards in a
consistent and sustainable manner with the local legal environment.
In the near future, the implementation of Islamic banking is
envisaged within the framework of the 'Islamic windows' model.


After the amendments to the legislative acts on Islamic banking
enter into force, the following products are envisaged to be
provided by banks within the framework of the 'Islamic window'
model:


Order-based contract type for production or construction —
Exemption;







Sale-based, that is, purchase-sale financing type —
Murabaha;


Lease-based financing type — Ijara. This product is considered
an analogue of financial leasing in traditional banking
activities;


Financing and deposit type based on profit and loss sharing
between the bank and the client — Mudaraba;


Deposit-based product similar to demand deposit — Wadia.


At the same time, two commercial banks are currently testing
Islamic financial products under the special regulatory regime
under the supervision of the CBA. International Bank of Azerbaijan
OJSC is testing the Murabaha product for financing movable and
immovable property registered in official legal registers, and
Rabitabank OJSC is testing both Mudaraba and Murabaha products. The
testing period of the products is until February 2, 2027," the
executive director noted.