State-lender Ziraat receives permission to run Islamic bank

State-owned Ziraat Bankasi has been given an operating permit for its own participation bank (formerly known as private finance houses) by the Banking Regulation and Supervision Agency (BDDK).

The operation of participation banks is based primarily on interest-free banking since the earning of interest is forbidden in Shariah-compliant finance.

According to a report published in the Official Gazette on Thursday, Ziraat Participation Bank, which was established after regulatory permission was granted on Oct. 10, 2014, has obtained an operating license.

Turkey currently has four Islamic banks: Bank Asya, Turkiye Finans, Albaraka Turk and Kuveyt Turk, which constitute 5.3 percent of the Turkish banking industry. The government plans to triple the share of Islamic banking assets in the country by 2023.

Recently, the BDDK granted the two other state lenders — Halkbank and VakifBank — permission to establish their own participation banks.