The International Bank of Azerbaijan has suspended the mortgage lending in the framework of Islamic Banking, Trend reported with reference to the Director of the Department of Islamic Banking Bahram Gurbanzadeh.
Gurbanzadeh explains this with problems caused by the devaluation of the manat on Feb. 21 this year. "We are currently reassessing the project and its potential," he said.
Just two days before the devaluation of the manat, February 19 Baku hosted the International Conference "Islamic Finance: Current status and the nearest expectations." It was stated that Azerbaijan is preparing for the application of Islamic Banking (IB) in full and the work in this direction enters the homestretch. OJSC International Bank of Azerbaijan (IBA) bears an ambitious idea of turning Baku into a regional Islamic financial center.
IBA then stated that locally it is already implementing the project, through which it has managed to attract 220 million of investment.
Nothing is reported on the suspension of operations by other Islamic Banking services.
Overall lending after the devaluation of the manat has narrowed and mortgage lending has virtually stopped in anticipation of stabilization of the manat. Therefore we can say that mortgage lending will not resume, including Islamic Banking in the coming months due to the negative outlook on the economy of Azerbaijan. Yesterday the credit rating agency Moody's lowered the GDP growth forecast from 4.3% to 1%, the inflation rate increased from 3.9% to 9%, and the budget deficit is projected to be about 10% of GDP instead of 1.8%.
Earlier, Finance Minister Samir Sharifov said that the development of a new program of mortgage lending has been initiated.
Islamic Financing covers a period of 8 to 60 months. Its essence is to avoid interests and futures transactions. The socially-oriented model of Islamic Finance works on reviving the economy, as it does not permit financial or debt bubbles. -0-
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