Aug 18 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
A stand-alone unit would allow IBA, 50.2 percent owned by
Azerbaijan's Ministry of Finance, to more than quadruple its
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 percent 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 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
percent 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
"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.
(Editing by Andrew Torchia)