We Added The Concept Of Participation Finance Into The Global Literature
We talked to Osman Akyüz, TKBB Secretary-General, about participation finance system's place in the global banking industry and the international activities of the sector. WHAT DO YOU THINK ABOUT THE GLOBAL DIMENSION OF PARTICIPATION FINANCE CONCEPT? Participation...
We talked to Osman Akyüz, TKBB Secretary-General, about participation finance system's place in the global banking industry and the international activities of the sector.
WHAT DO YOU THINK ABOUT THE GLOBAL DIMENSION OF PARTICIPATION FINANCE CONCEPT?
Participation banking system is not exclusively operating in Turkey. We see interest-free finance initiatives increasing especially in Islamic countries and also regions where Muslim minorities live. We hear the demands for switching to participation banking system especially in Turkic Republics and African countries. Based on the current expectations and our mission, we feel the need to carry our activities to more international areas. Those who use or at least who are interested in the participation finance system are curious about what we do. We changed the name of the interest-free banking system to participation banking and integrated the concept into the existing system. The concept of "participation finance" is being used in some countries at studies and reports on Islamic finance. The term participation finance is now in global terminology. Morocco is a great example of that; the country decided to call the system participation banking and adopted its legal regulations accordingly. To the best of my knowledge, international institutions, rating agencies and organisations are aware of the term participation banking and use it in their current literature.
WHAT GOALS HAVE YOU SET TO INCREASE THE RECOGNITION OF THE PARTICIPATION FINANCE SYSTEM IN THE INTERNATIONAL AREA?
We developed the participation finance system from scratch in 35 years. This is not a hybrid system but a structure with its own rules. Even though it is regarded to be within the conventional system and mentioned pretty much along with it, it is a mechanism with specific rules that progresses in its own way. Therefore, institutions who operate or wish to operate in the Islamic banking sector in Turkey provide their products and services under this umbrella term. They need to comply with the regulations and arrangements here. Thus, we strive to grow this unique banking ecosystem and to further the current financial architecture. And I can say we have come a long way. As you know, we adopted the strategy of introducing, promoting and developing the participation finance system in the domestic and international markets in 2015. And we started to follow the developments in the world more closely. We also included Fatma Çınar in our team this year in order to improve our international relations, increase awareness for the sector and introduce ourselves in the area.
APART FROM THE GOALS WE TALKED ABOUT, DO YOU CONDUCT ANY ACTIVITIES CURRENTLY TO INCREASE THE INTERNATIONAL RECOGNITION OF TKBB AND THE PARTICIPATION FINANCE SYSTEM?
Sure, we do. As I mentioned earlier, we now follow the international activities and institutions more closely and expand our team in this direction. We conduct activities to integrate the products that we've seen abroad into the Turkish participation finance system, and to ensure that our banks in the sector develop close relations with financial institutions abroad. We try to keep our mutual relations at the highest level in order to introduce and promote our members and our association. There are also other activities and projects we currently implement. For example, we try to increase national and global awareness on Islamic banking through our both local and international training activities. We work in cooperation with Islamic banks all around the world, and try to introduce and promote ourselves and the participation finance system better through our correspondent banks in other countries. We organise training activities for the employees of the institutions I've talked about. We initiated a certificate program a while ago. In that three-day program, we explained the participation banking ecosystem, how the system is operating in Turkey and the related institutions and agencies to the participants. What we did was to pave the way for effective and substantial information exchange on the concept. I believe that we will achieve great results from this initiative in the long term.
Another example for our activities can be the good relations we have established with participation banking institutions in different Islamic countries. We signed a cooperation agreement with Bahrain only a short while ago. And we are working in the same direction with Morocco. We received an official delegation from Djibouti. We made a comprehensive presentation to them on participation banking and introduced them to our member banks. And I believe we made a good impression on them. They said they wanted to stay in contact and integrate the participation finance model into their country. We are also in close relations with Azerbaijan. We organise certificate programs for people who want to do Islamic banking or are interested in the model. Now, we currently maintain close relations with the Islamic Development Bank and IRTI, and try to achieve cooperation with the Islamic Finance Institute at Marmara University (MUISEF). We will also work on a cooperation agreement with the interest-free financial institution of the United Nations (UN) on poverty. As you can see, we invest lots of our labour in this work. That's why we wanted to include our bimonthly journal Katılım Finans into our globalisation activities. From now on, our journal will be published in both Turkish and English to appeal to the global sector as well as the local and it will be complimentary journal for the participants of whole global Islamic finance industry.
THE 2015 STRATEGY DOCUMENT IS NOW BEING REVISED. IN WHAT WAYS WILL IT BE UPDATED?
We are updating the strategy document that we prepared in 2015. It will hopefully be completed in a short time. Our main goal with this revision is to promote the participation finance sector and determine a road map to reach our strategic target of 15 per cent market share in the banking sector in line with our needs. With that in mind, we determined six main strategies, especially for the promotion of the sector, product diversity and digitalisation. We want to carry the participation finance system to a level that it can compete with the conventional finance sector in Turkey and around the world. In other words, our missions are both the development of the participation banking system and increasing awareness on this banking model.
Interview: Röportaj Gültuğ Erdöl