First there are necessary regulatory changes that have to be made and meanwhile the Treasury has a lot of work to do, said Selim Kervancı, head of investment banking at HSBC Turkey and the official representative of the International Capital Market Association of Britain. "There are special financial products created exclusively for the Gulf region, but these can be used everywhere right now. In Turkey, we need new regulations to establish a presence for Islamic finance," Kervancı said. Recalling that HSBC is active in using Islamic financial products such as murabaha and ijara, Kervancı said these products are in line with the rising demand for infrastructure funding.
Sanjeev Kathpalia, country head of TAIB Bank, which has a presence in Istanbul and Bahrain, the so-called "participation" banks in Turkey are "the beginning of Islamic finance in Turkey."
"They introduced [Islamic finance] to banking laws and regulations," Kathpalia told the Hürriyet Daily News & Economic Review on Friday. "Since then, one can observe the expansion of these products. There has been a consolidation within participation banks. The growth rates of these banks are more than other commercial banks."
"There is a long way to go in terms of regulation and Turkey is moving in that direction," Kathpalia said. "But lots of technical work that would support Islamic finance is done in the West. In fact, the West is leading the growth [of Islamic finance]."
Kerim Alain Bertrand, general manager of ISI Emerging Markets, said the company has a special database just for Islamic finance. "Our clients are mainly from Asia, the Gulf region and Britain. I think this sector is growing slowly in Turkey, whereas it is developing rapidly globally. In Turkey, retail banking system is really limited and institutional banking is only for trade finance possibilities."
Bertrand said Islamic finance, with its rapid growth, can be an alternative source of financing for Turkey, but first legislation should be changed.