Azerbaijan’s Islamic banking sector developing, Kazakh official says

Islamic banking is actively developing in Azerbaijan, with the “Islamic window” model seen as the most suitable framework for integrating the sector into the domestic financial system, a Kazakh banking executive has said.

Speaking at the International Finance and Banking Summit in Baku, Javid Isayev, head of the Deposits Centre at Kazakhstan’s Bank Centre Credit, said that of the four Islamic banking models used in Kazakhstan, the “fatwa” and “window” approaches were the most applicable for Azerbaijan, Caliber.Az reports via local media.

Under the “fatwa” model, conventional banks adapt existing products by imposing Sharia-compliant restrictions and subjecting them to external religious compliance audits, effectively transforming them into Islamic financial instruments, he said.

Isayev noted that although this model was initially selected two years ago, regulatory changes later prompted a shift in strategy. “At present, we are preparing to obtain an Islamic banking licence in the form of a ‘window’,” he said, adding that other options include obtaining a full Islamic banking licence within the Astana International Financial Centre (AIFC) or operating as a fully-fledged Islamic bank.

He said both latter options required significantly higher costs and greater institutional readiness, making them more complex in practical terms.

Isayev also said that, contrary to expectations, the primary demand in Muslim markets was not for standard banking products such as cards or buy-now-pay-later services, but rather for a basic mechanism for savings. He cited Kazakhstan’s creation of the Islamic investment fund “Wardat al-Hayat” as an example that could be relevant for Azerbaijan.

By Aghakazim Guliyev