Türkiye will take more steps to promote participation finance: President

By Aysu Bicer

ANKARA (AA) - Türkiye will take further steps to promote the development of participation finance, which deserves more widespread use, said the nation’s president on Monday.

"In a country like Türkiye, where people's religious sensitivities are high, we must correctly identify the reasons why the participation finance system falls short of its potential, and determine solutions accordingly," Recep Tayyip Erdogan said in Istanbul.

According to Erdogan, there is a widespread misconception among the Turkish public that participation financial institutions are no different from banks. "The first step in transforming this perception, I stress, could be changing the name 'participation bank' to 'participation financial institution'," he urged.

This name change alone would help differentiate in the eyes of the public participation financial institutions versus banks, he said, adding that this step could be followed by simply and effectively explaining the difference in purpose and method between participation finance tools and banking ones.

"I believe with the resolution of this issue in the coming period, participation banks will enter a rapid growth process," he underlined.

In 2020, participation banks made progress toward creating an investment bank with a mandate to invest in Islamic assets, and the government set up a new department within the Presidency’s Finance Office to promote Islamic finance.

Erdogan said injustices over debt, income, and wealth fed by the world financial system are growing rapidly, hurting countries’ economic growth and social welfare in the process.

"This fact is now openly declared by international organizations such as the World Bank, OECD (Organization of Economic Cooperation and Development), and even the IMF since the pandemic broke out," he underlined.

The search for a new financial architecture is gaining momentum, he said. "We support efforts that will build a new financial architecture. I am confident that the participation finance system will make a greater contribution to achieving our economic goals in the coming days."

In 2021, global rating agency Moody’s said the country's Islamic banking assets, also known as participation banking assets, will at least double over the next five years, helped by supportive regulations and an expanding distribution network.

This rapid growth is being backed by Turkish government policies and regulations, and the expansion of participation banking networks.