BAKU, Azerbaijan, October 22. Demand for
Islamic banking in Azerbaijan was assessed before initiatives to
develop the sector were launched, Nargiz Shiraliyeva, head of the
Financial Sector Development Department at the Central Bank of
Azerbaijan (CBA), said at the third Islamic Finance Forum on
Thursday, Trend’s
correspondent reports from the event.
She noted that research showed considerable interest in Islamic
finance products among many businesses. However, limited awareness
of the sector could have led to inflated survey results in some
cases. Therefore, it was decided to introduce legislative changes
in stages.
“At the first stage, a pilot project was launched under the
regulatory sandbox initiative, and two banks are currently offering
Islamic finance products. The legislation has been designed to
address the practical challenges banks encounter during the
project,” she said.
According to Shiraliyeva, the initiative includes five key
Islamic finance products as alternative financial instruments.
“These include Ijarah and Istisna products, as well as
alternative term deposits and alternative demand deposits.
Amendments to the Tax Code and the Law on Deposit Insurance have
been proposed to ensure that the new products remain competitive
with conventional banking products and do not cost more.
For example, discussions have been held with the State Tax
Service to eliminate the additional VAT burden arising from
Murabaha products and the double application of state fees,” she
emphasized.
She added that the legislation also provides for insurance
coverage for Islamic deposits placed by citizens with banks. At the
same time, measures have been taken to assess risks for depositors
without creating an additional burden on banks.
