Within the global financial system Islamic Banking is characterized mainly as the "interest-free finance". For the first time this system was applied in Egypt in 1963-66 on the basis of a bank model developed by an Egyptian economist.
Today Islamic Banking covers a wide geographical contingent and applied in various advanced and developing countries of the world from USA to China.
In other words, we can observe formation and rapid development of Islamic Banking as a model of banking activities in the recent nearly 50-year period. According to the information given by The Financial Times and recent studies conducted by the International Monetary Fund, interest to the financial and credit organizations operating on the basis of the Islamic rules (Sharia) increases rapidly. According to expert calculations, till 2015 a half of money of 1.2-1.6 billion Muslims living in the world will be deposited in accounts with such banks.
Cooperation with the Islamic Development Bank (IDB) for use of funds of the interest-free bank institutions in development of the Azerbaijani economy takes on special significance. Thus, joining of Azerbaijan to this organization on July 04, 1992 favoured strengthening of mutual cooperation. At present
Azerbaijan takes an active part in activity of this organization with its share amounting to 9.76 million USD (0.13% of the total share capital).
It should be noted that TuranBank is one of the few banks actively conducting promotion of Islamic Banking as a parallel to the traditional one in the financial sector of our republic against the background of alternative sale channels. Thus, the bank joined various trainings which have been organized by ICPSD (Islamic Development Bank Group) in the field of Islamic banking since 2007 and in the result attracted first resources in the amount of 1 million USD for the purpose of small and medium business financing in 2008. The Bank has so far received a total of USD 13.8 million of Islamic finance allocations from the IDB. As it is known, Azerbaijan is a Muslim country and honours Islamic values that supports a need for development of the business environment within the Islamic ethical norms. Taking into account the abovementioned, all attracted funds were appropriated to the development of small and medium businesses in compliance with Sharia norms, as well as the continuous promotion of Islamic Banking significant role and development perspectives was carried out.
At present the financial instruments used by the bank within the Islamic Banking include Murabaha, 2-step Murabaha and Ijara.
Taking into account harmonization of the activity on Islamic Banking with the current legislation and other preparation opportunities, TuranBank plans to complete the Islamic Banking Window Project in the near future.