ANKARA (AA) – Turkey aims to be one of largest hubs for the participation banking sector, Deputy Prime Minister Mehmet Simsek said on Monday.
Participation banking in Turkey commonly refers to Islamic finance, which requires interest-free lending.
Speaking in an interview with Anadolu Agency, Simsek said the government was committed to help the sector thrive in Turkey.
“To become one of countries benefiting from this potential, our efforts continue at full speed,” Simsek said.
Simsek said the size of assets of participation banks in Turkey had reached 120 billion Turkish liras ($39 billion) by the end of 2015 and their share in the overall banking sector was 5.1 percent.
He stressed the goal set by representatives of the sector was to attain 15 percent by 2025.
Simsek underlined that the government had assumed a leading role to boost participation banking. He recalled the creation of new participation entities by state-owned Ziraat Bank and VakifBank, and the issuance of dollar- or lira-denominated sukuk (Islamic bonds) by the Undersecretary of Treasury.
“Sukuk will continue to be an important tool of our portfolio in efforts to diversify debt instruments and the expansion of our country’s investor base,” he added.
Participation banks have been operating for over 30 years in Turkey. Five banks, two of which are state-owned, have a license to provide Islamic finance services.
According to the Participation Banks Association of Turkey, these five banks have over 950 branches operating across the country.
The total number of employees in the participation banking sector was around 16,000 as of June of this year.