Baku: Islamic finance products are opening new avenues for diversifying financing and expanding businesses' access to financial resources in Azerbaijan, according to Rabitabank CEO Aydin Huseynov. He shared these insights during a panel discussion titled 'Enhancing Trade Solutions for Regional Connectivity,' which was part of the Islamic Development Bank (IsDB) Group Annual Meetings held in Baku.

According to Azeri-Press News Agency, Huseynov mentioned that Rabitabank began its collaboration with Islamic finance institutions in 2023. The bank signed its first agreement worth $10 million with the International Islamic Trade Finance Corporation (ITFC) in Jeddah. This was followed by another agreement in 2024 with the Islamic Corporation for the Development of the Private Sector (ICD).

Huseynov explained that the bank has since been focusing on developing Islamic finance products. He highlighted the initial challenges of introducing the Murabaha product to the market, which eventually yielded positive results after several months.

He emphasized that Islamic finance provides alternative financing opportunities for banks, particularly for clients who lack sufficient collateral or have limited access to traditional loans. Instruments such as supply chain finance, invoice financing, contract financing, and Murabaha offer asset and contract-based financing options.

The Rabitabank CEO also stressed that Islamic finance products enhance banks' access to international financial resources. These products enable banks to attract funding from entities like the Islamic Development Bank Group, ITFC, ICD, and financial institutions from Gulf countries, thereby diversifying liabilities and reducing financial risks.

Huseynov underscored the importance of raising awareness for the development of Islamic finance. Rabitabank organized seminars for clients to explain the essence of Islamic finance and the benefits of the Murabaha instrument, alongside extensive awareness and promotional activities.

He further mentioned that the regulatory sandbox mechanism of the Central Bank of Azerbaijan has been instrumental in introducing innovative products. Through this platform, Rabitabank presented its Murabaha product to the Central Bank, received approval, and began offering it from April 1 of the current year. Presently, Rabitabank is the only bank in Azerbaijan providing the Murabaha product on both the asset and liability sides.