In his speech at the special session within the scope of the 12th International Islamic Economy and Finance Conference, Banking Regulation and Supervision Agency (BDDK) Chairman Mehmet Ali Akben gave information about the developments in participation banking and the recent steps they have taken.
Stating that, as BRSA, they made quick decisions during the coronavirus pandemic and kept the wheels turning in the economy, Akben said:
“As BRSA, we made nearly 50 regulations during the fight against the Covid-19 epidemic. The proactive regulatory approach has shown its importance all over the world in terms of more active coordination and management of companies and the sector and the rotation of the wheels of the economy, and as BRSA, we contributed to this with various regulations. At the same time We worked in cooperation and coordination with our other stakeholder institutions, the Central Bank, the CMB and other stakeholders in the market.
There is now a culture of rapid response to incidents all over the world. This is an important start in terms of acting faster on the public side, in parallel with the developments in terms of responding to events, and this epidemic may be a reason for this, and we need to be more up-to-date and more proactive institutions in the future. We saw that it was necessary.”
“The asset size of participation financial institutions is around 6.5 percent”
Mehmet Ali Akben stated that the most important obstacles to sustainable growth and development are low savings rates and the weakening of the connection between the real sector and the financial sector, and pointed out the structure of the participation finance system that has the potential to make significant contributions to the solution of these problems.
Reminding that participation finance activities in Turkey started with the private financial institutions established within the framework of the Communiqué of the Undersecretariat of Treasury and Foreign Trade issued pursuant to the decision of the Council of Ministers numbered 83/7506 on the Establishment of Private Financial Institutions (SFIs) taken in 1983, Akben said that the sector in question was included in the legislation at the legal level in 1999. He said he found a place.
Stating that the place of the participation finance sector in the legislation was made more clear in 2005, Akben said:
“The asset size of participation financial institutions, which was 10 billion TL in 2005, has grown steadily over the past 15 years and reached 360 billion TL as of May 2020, and its share in the financial sector has increased from 2.4 percent to 6.5 percent. We can even say that it has exceeded this by a little as of June.
In the same period, the financing provided by the sector increased from 6.5 billion TL to 181.7 billion TL, the participation funds it collected increased from 8.4 billion TL to 270.8 billion TL, and its equity capital increased from 1 billion TL to 24.6 billion TL. It has increased to TL. On the other hand, participation financial institutions, which had 292 branches and employed 5 thousand 747 personnel at the end of 2005, reached 1,191 branches and 16 thousand 310 personnel as of May 2020. “These growth figures here make us very hopeful for the future.”
“Financing provided by participation financial institutions increased by 45.7 percent”
BRSA President Akben said that while the asset growth of conventional financial institutions was 20.6 percent in the last year, the assets of participation financial institutions increased by 44.1 percent, and participation banks seem to be a little ahead in financing SMEs.
Akben said:
“While conventional finance sector loans and deposits increased by 22.8 percent and 28.5 percent, respectively, financing provided by participation financial institutions and participation funds increased by 45.7 percent and 61.7 percent, respectively. In the said one-year period, the conversion to non-performing loans in the loans of the conventional finance sector While the rate increased from 4.2 percent to 4.6 percent, this rate decreased from 4.8 percent to 4.3 percent in the participation finance sector.
In the past year, while the number of branches of conventional financial institutions decreased by 246 and the number of personnel decreased by 2 thousand 988, participation financial institutions opened 57 new branches and employed 513 new personnel. The growth performance of the participation finance sector becomes more meaningful with its contribution to the real economy.
While the share of SME loans in the loans provided by conventional financial institutions remained at 24.4 percent in the last year, the SME financing rate in participation financial institutions increased from 32.5 percent to 34.5 percent. “We expect participation financial institutions to provide more support to the real economy and sustainable development in the coming period, as required by participation finance principles.”
Türkiye is the 4th country that exports the most sukuk
Mehmet Ali Akben stated that when looked at globally, the total size of the participation finance sector in the world increased by 11.4 percent in 2019 compared to the previous year, from 2.19 trillion dollars to 2.44 trillion dollars, and said, “In terms of the total volume of participation finance, our country is approximately 63 billion dollars.” “It ranks 7th in the world. Our share of the world pie is approximately 2.6 percent.” he said.
Stating that the sector’s total assets in the field of banking, one of the sub-components of participation finance, increased by 22.2 percent as of the end of 2018 and reached 47.9 billion dollars at the end of 2019, Akben said that in terms of sukuk issuances in the capital market field of participation finance, Turkey was one of the countries that issued the highest amount of sukuk last year. reported that it ranked 4th among the
Akben said:
“The effect of private sector sukuk issuances rather than the public sector is greater in the increase. While premium production in the world in the field of participation insurance increased by approximately 3.2 percent in 2018 compared to the previous year, this rate was 69 percent in our country. Within the framework of our country’s 2023 financial services vision, participation finance The target is to increase the asset size of the system to over 100 billion dollars and thus increase the share of the participation finance sector in the financial sector to 15 percent.
Studies on our participation finance sector, which has received significant public support after the 2000s, gained momentum after the workshop held at the end of 2013 in order to reveal all the needs for the development of the sector and for Istanbul to become an international center in the field of participation finance. “As a result of the opinions and recommendations made in the workshop in question, the development of the participation finance sector was included in the 10th Development Plan (2014-2018).”
Rector of Istanbul Sabahattin Zaim University Prof. Dr. Mehmet Bulut stated that the Islamic economic approach puts humans, the most honorable of creation, at the center and said that Islamic economy is better understood by the world day by day.
