The Islamic banking system in Azerbaijan began to be re-implemented in the financial sector from 2026. Currently, two banks – Azerbaijan International Bank and Rabitabank – have an Islamic banking corner. Work continues towards forming the legal and regulatory framework in this direction.
The goal is to identify market demand by offering Sharia-compliant financial products within the framework of the "Islamic window" model through traditional banks and to create a basis for broader implementation.
The Central Bank of Azerbaijan stated in response to an inquiry from Modern.az that a draft of amendments to the Civil Code, the Tax Code, the Laws of the Republic of Azerbaijan "On Banks", "On Non-Bank Credit Organizations", "On State Duty", "On Credit Bureaus", and "On Privatization of State Property" has been prepared and submitted to the relevant state bodies for the purpose of implementing Islamic banking in the country:
"Reliance on international experience is one of the main priorities in the process of organizing Islamic banking. Thus, when preparing the draft amendments to the legislation regarding the implementation of Islamic banking, the experience of countries such as Turkey, Pakistan, Malaysia, Kazakhstan, and Kyrgyzstan, as well as international standards, were analyzed and taken into account. Ensuring the compliance of the Islamic banking activities to be implemented with the fundamental principles of Islamic banking has been considered.
The draft amendments have been prepared taking into account international experience and adapted to local legislation. The goal is to implement international standards in a harmonized and sustainable manner with the local legal environment.
During the preparation of the project, meetings were held with regulatory and supervisory bodies in the field of Islamic banking in relevant countries for the purpose of exchanging experience and studying best practices. The draft amendments to the legislation were prepared by the Central Bank.
In the near future, the implementation of Islamic banking is envisioned within the framework of the "Islamic windows" model. The issue of establishing Islamic banks, however, may be considered in the next stage, taking into account the practical results of the implementation of Islamic financial products in the country and the market's development dynamics."
