Integration of Islamic finance into banks' risk management systems - next step, CBA says

Following the introduction of amendments to Azerbaijan's legislation allowing the implementation of Islamic finance, the next stage will be the integration of this financing model into banks' risk management systems, Shahin Mahmudzada, Executive Director of the Central Bank of Azerbaijan (CBA), told journalists on the sidelines of the 3rd Islamic Finance Forum in Baku, Report informs.

According to him, a significant increase in the volume of loans and deposits in the field of Islamic finance is expected over the next five years: "We view Islamic banking not as a competitor to the traditional banking sector, but as a complement to it, an important partner, and a new direction in the financial ecosystem. In this regard, the Central Bank has prepared draft amendments to the legislation and submitted them to the government. The document is currently at the approval stage.

The legislative package covers a total of five main products and principles. At the same time, to ensure a level playing field with traditional banking, appropriate changes are planned regarding taxation, state duties, and deposit insurance."