Interest-Free Banking

About Interest-Free Banking

In contrast to the conventional banking system, interest-free banking avoids interest income and interest-bearing products in order to provide financial services. Based on the Islamic prohibition on interest (riba), under Islamic banking, financial operations and products comply with fair and ethical standards. Principles such as the sharing of profit/loss and risk sharing form the cornerstone of interest-free banking.

Known as "participation banking" in Turkey, interest-free banking is overseen by the Banking Regulation and Supervision Agency (BRSA). The procedures and principles pertaining to the structures and processes which they will establish to operate in accordance with interest-free banking principles and standards have been regulated within the framework of the BRSA-published Communiqué on Compliance with the Principles and Rules of Interest-Free Banking in issue number 30888 of the Official Gazette dated September 14, 2019.

Interest-free banking is growing in popularity both in Turkey and globally, particularly among people and companies seeking to adhere to Islamic financial regulations. Furthermore, interest-free banking is popular throughout the world, not just in Muslim nations but also among many other cultural and ethnic groups. High growth rates and burgeoning market prospects support the potential of the interest-free banking industry for expansion in Turkey.

Offering interest-free banking services provides banks with the opportunity to stand out in the competitive financial industry and attract more clients. By providing interest-free goods, banks can attract a variety of clients and obtain a competitive edge. Banks can create innovative financial solutions and provide customers with a variety of appealing options owing to interest-free banking.