Türkiye Becomes the New Epicenter of Islamic Finance

Türkiye’s determination and commitment to propelling its Islamic finance sector to global heights is commendable. With its strategic efforts, Türkiye envisions itself as a global epicenter for participation in banking and investments, remarked a key industry figure.

“Türkiye has not only been an advocate for advancing Islamic banking but has also significantly contributed to magnetizing capital inflows from Islamic countries,” said Yousef Hassan Khalawi, the esteemed secretary-general of the Islamic Chamber of Commerce, Industry, and Agriculture.

Historically bridging the East and West, Türkiye is uniquely positioned. “Türkiye’s strategic geographical location, adjacent to Europe, the Middle East, and Asia, unlocks access to a myriad of markets and entrepreneurial ventures,” Khalawi emphasized in a conversation with Daily Sabah. He underscored Türkiye’s strategic deployment of this geographic benefit to draw in investments, especially from the Islamic nations.

However, like any burgeoning industry, there’s always room for progress. Khalawi suggests further consolidation in areas like refining regulatory structures, amplifying education surrounding Islamic finance, diversifying Shariah-adherent products and services, and fostering stronger ties with global Islamic financial entities. This will undoubtedly cement Türkiye’s leadership in the realm of Islamic finance.

Delving into the legislative backdrop, Türkiye’s commitment to Islamic banking is profound. The nation adopted the Participation Banking Law back in 1983, laying a robust groundwork for Islamic banking endeavors. Bodies like the Banking Regulation and Supervision Agency (BDDK) and the Capital Markets Board (SPK) ensure that Islamic financial operations remain streamlined and compliant.

Moreover, legislative reforms tailored to bolster Islamic finance have been initiated by Türkiye, ensuring that the playing field remains equitable for Islamic financial institutions. The nation’s receptive approach is seen in the amendments made to its legal frameworks, accommodating Shariah-adherent financial tools.

At the forefront of this revolution are Türkiye’s domestic Islamic banks, colloquially known as participation banks. As of May this year, a total of eight such institutions existed in Türkiye, commanding assets valued at a staggering TL 1.4 trillion ($52 billion). With over 1,400 branches spread across the nation and employing approximately 18,650 individuals, their impact is palpable. 2022 alone saw these banks register a remarkable asset growth of 65.6% and an astounding 443% surge in net profitability.

Khalawi lauds the performance and contribution of Türkiye’s Islamic banks. “These banks have not only set a global benchmark but have also impeccably catered to the diverse financial needs of the native populace,” he remarked.

AlBaraka Forum, where Khalawi also serves as secretary-general, recognizes the immense opportunities in Türkiye. They’ve been avidly focusing on bolstering the Turkish market, ensuring it remains contemporary and addresses modern challenges. The forum offers a global platform, promoting intellectual exchanges, collaborations, and shared best practices to drive Islamic finance growth in Türkiye.

Highlighting the allure of Türkiye, Khalawi draws attention to its vast domestic market, the burgeoning demand for Shariah-compliant services, and its robust consumer base.

He eloquently points to the rich tapestry of Türkiye’s Islamic cultural and historical lineage. “Türkiye’s deep-rooted Islamic heritage, coupled with its dedication to preserving Islamic traditions, makes it an attractive epicenter for Islamic finance and business. It instills a profound sense of cultural resonance for investors and businesses hailing from Islamic nations.”

Türkiye, with its rich history and forward-looking approach, stands poised to redefine the global landscape of Islamic finance.