In a sign that Islam’s role in Azerbaijan may be slowly evolving, the country’s largest and only state-owned bank, the International Bank of Azerbaijan, plans this autumn to open a specialized branch offering limited Islamic banking services.
A prohibition on charging interest for loans is the major distinction between Islamic and Western-style banking. Instead of interest, Islamic banks take a stake in businesses to which they loan money, and share both the profit and loss with the client.
Several Azerbaijani banks already offer such loans, but Azerbaijani law does not authorize a full range of Islamic banking services. By setting up an Islamic banking services branch, the International Bank of Azerbaijan (IBA), as a state-owned financial institution, is sending signals that that situation could start to change.
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Shahin Abbasov is a freelance reporter based in Baku and a board member of the Open Society Assistance Foundation-Azerbaijan.