Azerbaijan’s Central Bank sends Islamic finance legislation to government

Photo: Trend News Agency

BAKU, Azerbaijan, October 22. The Central Bank of Azerbaijan (CBA) has prepared and submitted to the government a legislative package incorporating the fundamental principles of Islamic finance and covering five key products, three on the asset side and two on the liability side, CBA Director General Shahin Mahmudov said at the third Islamic Finance Forum on Thursday, Trend's correspondent reports from the event.

He said the package aims to establish clear rules for market participants, ensure legal certainty, provide an appropriate framework for risk management and protect consumer rights.

“We believe that the most important factor in building a sustainable market is establishing a sound, predictable and transparent legislative environment. Our second priority is ensuring competitive neutrality between Islamic finance and conventional banking. We do not believe that transactions with the same economic substance should be subject to different taxes or fees solely because their legal or contractual forms differ.

For this reason, tax and fee neutrality, the harmonization of relevant legal procedures, and the integration of Islamic finance products into the existing financial infrastructure are particularly important. Integrating deposit insurance mechanisms is also one of the essential conditions,” he said.

Mahmudov added that Islamic finance requires new knowledge and skills.

“The issue is not limited to Islamic banking. It also involves developing professional skills in Islamic law, Islamic accounting and risk management in Islamic finance. Therefore, strengthening professional training through cooperation with educational institutions, professional associations, financial institutions and international partners is one of our key priorities,” he stressed.