15:50 - 22.10.2026

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October 22, Fineko/abc.az. The Central Bank of Azerbaijan is considering Islamic finance not as a competitor to the traditional banking sector, but as an important component of the financial ecosystem, complementing the existing system.

According to CBA Director General Shahin Mahmudzade, the draft legislative amendments aimed at developing Islamic finance have been submitted to the government and are currently undergoing the approval process.

The package includes development of three main areas of Islamic financial products.

In order to ensure equal competitive conditions with the traditional banking sector, it is planned to introduce appropriate amendments to the legislation on taxation, state duties and deposit insurance.

As part of the reforms, a special experimental "regulatory sandbox" regime is being introduced in Azerbaijan. Currently, two banks are testing various Islamic finance products within its framework.

After the legislative changes come into force, it is planned to introduce the sukuk instrument in the capital market and integrate it into the risk management system.

According to Mahmudzadeh’s forecasts, a significant rise on volume of financing and deposits in the Islamic finance segment is expected in Azerbaijan in the next 5 years.