The International Bank of Azerbaijan (IBA) is preparing to launch a separate Shariah-compliant banking unit that would more than quadruple Azerbaijan's Islamic financing business.
The stand-alone unit, which would be in compliance with an Islamic banking law set to take effect in the spring, would be 50.2 percent owned by Azerbaijan's Ministry of Finance, according to IBA Director of Islamic Banking Behnam Gurbanzada, Reuters reports.
"IBA is working on developing new products as well as establishing a platform for a separate, fully Sharia-compliant unit," Gurbanzada said, according to Reuters.
An estimated 93 percent of Azerbaijan's nine million citizens are Muslim.
To date, IBA--the holder of 40 percent of Azerbaijan's banking assets--has extended $180 million in Islamic financing in the country, though the number may substantially increase to as much as $750 million within a year following the new legislation, Reuters reports.
IBA currently offers Shariah-compliant products through an Islamic window that allows the provision of Islamic financial services provided client money is segregated from the rest of the bank. The stand-alone unit is expected to increase the appeal of Islamic banking for retail clients.
Additionally, a strong domestic Islamic banking platform for IBA could be used 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 countries which are interested in Islamic banking," Gurbanzada said, according to Reuters.
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