Turkey has declared its full support for the development of Islamic finance in Azerbaijan, calling it a “strategic regional priority.”
The announcement came from Tarık Akın, representative of the Turkish Presidency’s Investment and Finance Office, during the Islamic Finance Forum 2025 held in Baku.
Akın said the Islamic financial system – built on ethical principles, transparency, shared risk, and fair income distribution – is increasingly seen as a key driver of sustainable development.
“We view support for Islamic finance as a strategic goal not only for Turkey but for the entire region – particularly for Azerbaijan,” he stated.
The Turkish official noted that post-war reconstruction in Karabakh offers a promising platform for Islamic financial instruments such as sukuk, takaful, and profit-sharing mechanisms.
“These tools can provide alternative sources of financing for major projects in the liberated territories,” Akın added, emphasizing Azerbaijan’s potential to become a global Islamic finance hub given its energy base and strategic location.
Azerbaijani Banks Ready – Await Legal Green Light
According to Yunus Abdullov, executive director of the Azerbaijan Banks Association (ABA), the domestic banking sector is technically ready to adopt Islamic banking models, but requires completion of the institutional and legal framework.
“Some banks are already developing Islamic finance products and pilot solutions,” Abdullov said. “The market is ready – now it’s a matter of establishing the institutional base.”
He confirmed that the creation of a Sharia Supervisory Council under the ABA is in its final phase. The council will act as a unified reference body, overseeing product design and compliance audits.
“All the groundwork – from market readiness to knowledge and partnerships – aligns with the Central Bank’s strategic vision,” Abdullov noted.
Central Bank Roadmap Nears Completion
Rustam Tahirov, director of sustainable finance development at the Central Bank of Azerbaijan (CBA), said the regulator has already drafted a roadmap for an “Islamic window” model, allowing conventional banks to offer Sharia-compliant services.
The plan draws on international best practices and outlines a phased introduction of Islamic finance products in cooperation with financial associations and independent experts.
“At the first stage, independent specialists will identify viable products through the Islamic-window framework. Later, we will expand the offering based on market feedback,” Tahirov explained.
He also confirmed that draft amendments to the Civil Code, Tax Code, and the Law on Banks have been prepared and will soon be submitted to the government after consultations with the financial sector.
Toward a Regional Financial Hub
Analysts note that with support from Turkey and active engagement by Azerbaijani regulators, the country is positioning itself to become the leading Islamic finance center in the South Caucasus.
If adopted, the new framework could attract Gulf and Malaysian investors, diversify the banking system, and strengthen Baku’s ambition to evolve into a regional hub for ethical and sustainable finance.
