About Interest-Free Banking

On the contrary to the conventional banking system, interest-free banking is a financial system that offers services while avoiding interest income or products involving interest.. Based on the Islamic prohibition of interest (riba), this type of banking operates based onfair and ethical principles in financial transaction and products. Principles such as profit andloss sharing and risk sharing form the core of interest-free banking.

Also known as "participation banking" in Turkiye, interest-free banking is regulated by the Banking Regulation and Supervision Agency (BRSA). The "Communiqué on Compliance with Interest-Free Banking Principles and Standards," published in the Official Gazette on September 14, 2019 (Issue No. 30888), establishes the rules and guidelines for the structures and processes that banks must implement to operate in accordance with the principles and standards of interest-free banking.

The demand for interest-free banking is rapidly increasing both in Turkiye and in the globe, particularly among individuals and businesses seeking compliance with Islamic finance principles. Furthermore, interest in interest-free banking system is not limited to Muslim countries but extend across various cultural and ethnic groups worldwide. The growth potential of the interest-free banking sector is encouraged by high growth rates and expanding market opportunities in Turkiye.

Banks offering interest-free banking services find opportunities for differentiation and customer base expansion in the competitive financial market. Providing interest-free products helps banks gain a competitive edge and appeal diverse customer segments. Interest-free banking also offers banks the chance to develop innovative financial products, providing customers with distinct and attractive options.