Turkey to promote interest-free finance

ISTANBUL-Anadolu Agency

Turkey will promote interest-free finance systems and loan methods for diversifying interest-free products and services in the coming period.

The country will make regulations for interest-free finance systems, according to data Anadolu Agency compiled from the Turkish Presidency’s Annual Program which was released on Nov. 4.

The program noted that interest-free corporate loan methods will be encouraged and “Sukuk” - non-interest-bearing note - will be issued.

Within the scope of the non-interest finance system regulations, the government aims to form a real estate investment trust for agricultural lands’ incomes.

“A rating agency will be established to comply with the principles of interest-free finance,” the program said.

Turkey, which established three state participation lenders besides three private participation lenders, attaches great importance to non-interest finance solutions.

President Recep Tayyip Erdoğan has previously said the participation of finance institutions’ share is targeted to rise 15 percent in the banking assets as of 2025.

According to data from the Participation Banks Association of Turkey, total funds collected by those lenders increased by 33.9 percent from end-2018 to stand at 184 billion Turkish Liras ($32 billion) as of end-August.

Funds allocated by participation banks grew by 11.2 percent over the same period to hit 139 billion liras.

Total assets of the country’s participation banks amounted to 252 billion liras, rising 22 percent.

Combined net profit of those lenders were 1.8 billion liras as of end-August.

Six participation banks, namely Ziraat Katılım, Vakıf Katılım, Emlak Katılım Bankası, Turkiye Finans, Kuveyt Türk and AlBaraka, operated 1,145 branches and employed nearly 16,000 personnel.