Istanbul: One of the highest government officials in Turkey has shown his concerns over the share of banking system by participation banks in the country.
The Deputy Prime Minister of Turkey, Ali Babacan, said that the participation banks’ share in the Turkish banking system is at 5 percent which is below expectations. Meanwhile, as a participation bank Albaraka looks to found an Islamic insurance company if the legal basis is formed in the country.
“The number of participation bank branches has reached 869, with 16,190 staff members. Their size of assets has increased to 81.5 billion Turkish Liras, as their funds provided real sector worth 60 billion liras. The participation banks’ share in assets is 5 percent and in funds it’s 6 percent. These figures are below our desires,” said Babacan during the conference on “Islamic Finance Instruments: Expectations and Opportunities for Turkey.”
The minister stated that the private sector has started sukuk exports like the Treasury. The tax difference between sukuk and bonds has been removed, legislation related to Islamic financing has been completed, and the private pension system has become able to be built on non-interest instruments, as preferred by 300,000 people.
Meanwhile, Bahrain-based Albaraka CEO, Adnan Ahmed Yousif, said that they had informed Turkish authorities that they are planning to found an Islamic insurance firm.
Turkey doesn’t have a legal basis for this, but it has expressed its intention to the authorities, Yousif added.
He also said two new participation banks from the Gulf countries are preparing to enter to the country. Albaraka Türk, Bank Asya, Türkiye Finans and Kuveyt Türk are the participation banks currently operating in Turkey.