We Are Happy To Leave Behind 20 Successful Years

The main aim of TKBB is to create a financial industry in Turkey. While the member bank institutions of the Association represent the prominent actors of this industry, the formation process of the participation finance ecosystem is built by the TKBB.

COVER SUBJECT 29.11.2021, 10:44 29.11.2021, 11:07
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We Are Happy To Leave Behind 20 Successful Years

Participation banks were first established as special finance houses in Turkey. While the legislation was being made, these financial institutions were named as "Special Finance House" with the Government Decree issued by the Republic of Turkey at the end of 1983. In this context, the demand for establishing an interest-free financial institution had arisen in Turkey, especially by the private sector that avoids interest. In 1984, Albaraka Türk and Faysal Finans institutions, which are two financial institutions with Gulf capital, were established. In 1995, the idea of establishing a union or association emerged, and in a short time, the Foundation of Special Finance Houses Association was established.

Since this sector is a new financial model for Turkey, in addition to creating this model, we have also undertaken the task of explaining this financial model to our interlocutors, customers, and depositors. Information sharing began to be made to the relevant units, public institutions, or the public, in line with our monthly agendas, under the Foundation of Special Finance Houses Association umbrella, of which I was the first chairman. In the following period, the Special Finance Houses Association was established with a staff of three. With the crisis that occurred in May 2001, the existing special finance houses created a new fund under a trustfund similar to the Savings Deposit Insurance Fund. In 2002, the Special Finance Houses Association was included in the banking law, and in 2005, as a result of the regulation made in the entire banking law, special finance houses began to take place under the name of participation banks. I am still working as the Secretary-General, which I started at Turkey's Special Finance Houses Association since June 2002. The chairmanship was chosen from among the general managers of the special finance houses that are members of the Association, with a two-year mandate from the first days of the Association. The same organs continue to be formed under the roof of TKBB.

THE REFORM PROCESS OF THE FINANCIAL SYSTEM AFTER 2001

The regulation made in the banking law in 2005 was implemented as an effort to eliminate the damage in the banking sector of the 2001 crisis. It was aimed to create an  effective mechanism both in regulation and supervision. In this direction, a new formation called TMSF was established separately from the BRSA. This formation was aimed to establish mechanisms to liquidate financial institutions and banks that were primarily out of the system. In the process of eliminating the effects of the 2001 crisis, independent boards and organizations were established with the insistence of the IMF. In other words, it was tried to establish mechanisms that would reduce the effectiveness of politics on the economy. Independent boards were brought forward and authorized. During this period, when the financial system was being reformed, in addition to financial support, the IMF sent executives who were experts in management to Turkey. In this way, the financial contribution to Turkey was intended to be supervised on an administrator basis. Public banks, most affected by the crisis, were amended to return to the bank system with these established systems. As a result of be carried out by the TKBB on behalf of the participation finance sector.

PARTICIPATION FINANCE ECOSYSTEM AND TKBB

The main purpose of TKBB is to establish a financial industry in Turkey. While the member bank institutions of the Association represent the prominent actors of this industry, the formation process of the participation finance ecosystem is built by the TKBB. TKBB undertakes training, current standards, determination of fundamental principles, and activities related to industry recognition.

We also take an active role in public communication by participating in many events in the press and media or universities to promote the industry. Our promotional activities include digital media activities and sponsorships such as the bimonthly Katılım Finans magazine, social media channels, and the website within the TKBB.

On the other hand, the construction of the Interest-free Finance Institute Library opened at Istanbul University is carried out by TKBB. In addition, I believe that our dictionary study, which is in the process of preparation, will provide a significant benefit for the concepts in the participation finance ecosystem to gain an established character. All the studies carried out are of great importance in the depth of this sector and in the formation of its architectural infrastructure. As TKBB, our main duty is to continuously carry this infrastructure support further.

In 2015, a Strategy Document study was carried out by the TKBB to serve the participation finance sector. This document, which was prepared in cooperation with a professional company, ensured that all stakeholders could create an ecosystem for the sector, such as the BRSA, the Central Bank, and the Ministry of Treasury and Finance. The strategy document has been used as a guide to our sector since 2015. After the update work carried out with the same independent auditing and research company last year, we continue to work on implementing strategies that will carry the participation finance sector forward with the  new strategic targets we have added. The digitalization strategy, which is one of the new strategic goals added in the updated study, has gained significant importance for our industry, especially after the pandemic. A significant part of banking services can be provided only through digital channels and swiftly with the enacted regulations.

Participation banks constitute a relatively young industry both in Turkey and in the world. Although the development of the participation finance sector in our country has caught the examples of the world, it is even more advanced in specific areas such as digital banking. It can sometimes take a few years for a new product to come to life with innovative approaches with the predictions that it will be useful. Therefore, it is crucial to make a collective effort and make joint efforts with other institutions in the system. We carry out continuous activities in the TKBB with a team of 26 people. Furthermore, some temporary processes are managed by a working group of about 30 people. Thus, we aim to further advance our industry with a collective labour approach for development. In addition, regulation, legislation, service production, or new product development activities are formed with special efforts. We support the participation finance sector with activitiesthat will contribute to its development, with the vision of moving forward. Accordingly, we continue to establish relations with all stakeholders in the financial ecosystem, such as insurance institutions and capital market institutions. We will continue to use all the facilities we have on behalf of the development of our sector. We hope our banks provide better quality and more qualified service to help us grow our industry by finding solutions to all current issues with a more participatory approach.

PBAT Secretary General Osman Akyüz

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