KUALA LUMPUR: The Turkish Islamic banking and finance sector commands a 5% to 6% of the nation’s overall banking assets, much lower compared to Malaysia’s 20% or US$65.6 billion (RM202.7 billion) in assets in 2012.
The secular Turkey is making great strides with more progress expected in the coming years, though it conceded that Islamic banks are still dependent on interest rates as the core benchmark for Islamic banking business, according to a board member of the Turkey’s central bank.
“Turkey is a secular country, hence the government has no Syariah board like in Malaysia where there is a Syariah board, but the Islamic banks have their own consultation boards composed of Islamic experts,” Central Bank of Turkey board member Necdet Sensoy (photo) said at a forum on Islamic finance here last Friday.
“Islamic banks are not allowed to invest in government bonds, and this is a disadvantage for the Islamic banks compared to the conventional banks.”
The government bonds are not interest-free, whereas the Islamic banks are promoting free interest banking and financing.
Turkey has only four Islamic banks, and they are limited in their scope of business unlike Malaysia’s vibrant Islamic finance portfolio, said Sensoy.
The four Turkish Islamic banks are Bank Asya Alkatim, Al-Baraka Turk, Kuveyt Katilim Bankasi also known as Kuveyt Finans and the Turkiye Finance, majority-owned by Saudi Arabia’s National Commercial Bank, accordi ng to Muhammad Islami Onal, the economic counsellor of Turkey in Kuala Lumpur.
Islamic banking in Turkey dated back to 1985, when the government passed legislation for interest-free banking where Islamic banking is called “participation”.
Huge demand
Sensoy said one area where Islamic finance is experiencing growth and even edging conventional banks in Turkey is the provision of private pension via the Asya Pension Fund and in Islamic equity.
Turkish Islamic lender Bank Asya Alkatim has made inroads in its campaign to expand the number of private pension accounts in Turkey, where private retirement funds are still a novelty, said Sensoy.
The bank had opened over 39,000 private retirement accounts so far since the pension fund was created in mid-May 2012, and he added that by year-end the number of private pensioners covered by the bank is expected to be much higher.
The Turkish government has given incentives to encourage long-term deposit of the pension funds, offering 25% profit for funds stocked for at least 10 years, and this is one of the reasons why such funds are popular.
Another important aspect of the Turkish Islamic finance market was the launch in the last quarter of 2012 of the Sukuk al-Ijara, which is the only form of sukuk allowed in Turkey, and known as the lease certificate.
Another success story is Turkey’s Treasury Department’s launching of the sovereign sukuk intended to raise one billion lira (RM1.7 billion) from the market. Due to huge demand, the offering was increased to 1.5 billion lira. The orderbook hit eight billion lira and the offering was oversubscribed by five times.
Sensoy spoke at the 37th Islamic banking and finance discussion series organised by the International Islamic University Malaysia’s (IIUM) Institute of Islamic Banking and Finance.
(F.M.T News / 02 April 2013)
---
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
No comments:
Post a Comment