Slayt Basligi Yok

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PARTICIPATION BANKS IN THE FINANCIAL SYSTEM OF
TURKEY
Updated on Fri, 16/11/2007
THE PARTICIPATION BANKS ASSOCIATION OF TURKEY
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INTEREST-FREE BANKING IN TURKEY AND THE GLOBE
A- TOTAL ASSET VOLUME OF INTEREST- FREE
BANKING IN THE WORLD 300 BILLION US.
B- THE NICHE OF INTEREST- FREE BANKING IN
THE BANKING SECTOR OF SELECTED COUNTRIES
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The Banking System of Turkey
Depository Banks
Participation Banks
Development Investment Banks
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• NOT AN ALTERNATIVE, BUT AN INTEGRAL
• COMPONENT OF TURKISH BANKING SECTOR.

(2) A THIRD TYPE OF BANKING, TOGETHER WITH
DEPOSITORY BANKS AND DEVELOPMENT INVESTMENT
BANKS.
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(3) PARTICIPATION BANKS ARE FUNCTIONALLY SIMILAR
TO DEPOSITORY BANKS. BUT COLLECTING AND
DISBURSING FUNDS ARE DIFFERENT IN PBs A )
Collecting Funds A1) Special Current Accounts
These are the accounts held by Depositors who
know that there is no return of any kind to the
accounts the funds deposited in such accounts
can be withdrawn any time. Banks liability
covers only the principal amount deposited.
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A2) Participation Accounts These are the
accounts held by those depositors who know that
there may be a return on the principal amount
invested in the Bank as well as a loss in the
principal. The Bank does not guarantee a return
on these principal investment deposits as well
any projected return(profit).
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B) Extending Loans B1) Corporate Finance
Support This is a method whereby the Customer
of the Bank (ie. Obligor of the financial
transaction) buys a movable or immovable commodity
from a Vendor (seller) against payment effected
by the Bank to the Vendor. Customer of the
Bank is obliged to cover total cost of this
transaction back to the Bank, including its
Mark-up, in deferred installments.
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B2) Individual Finance Support A method of
financial facility whereby the purchase of the
goods or services for individual requirements
like car and house are covered (paid) by the
Bank on behalf of its Customer (ie. Obligor)
against the debt of Customer, payable in
installments. B3) Leasing This method is
subject to Financial Leasing Law. Movables
and immovables are purchased by the Customer (ie.
Obligor) of the Bank. Lessor (ie. Bank) hires
the commodity to its Customer (ie. Lessee) who
buys it in installments (ie. Rentals) in which
the Mark-ups are included. Ownership of
commodities are transferred to Lessse at the end
of Leasing Period
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B4) Financing Document Against Goods Instead of
buying selling commodities, Banks can buy
sell Documents representing them if they are
subject to Foreign Trade and Exchange
Legislation. This is a method whereby Bank
provides loan facilities against documents
representing goods. B5) Profit and Loss
Partnership Investment By this method the Bank
invests its funds in a project of its Customer
against an Agreement (contract) between the Bank
and this Customer (ie. Business Partner) in
which the ratios of the profit and loss to be
shared among themselves are inscribed before the
operation. Also the inputs of the partners
and their collaterals must have been written.
Banks partner can be individual or institutional
person.
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2. NICHE OF PBs IN THE BANKING SECTOR IN
TURKEY
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Note Non-performing loans are not included.
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Note Not included non-performing loans.
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3. Participation Banks Growth Tendency
Total Nr.of Staff and Branches of PBs
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MAIN FINANCIAL FIGURES OF PARTICIPATION BANKS
IN TURKEY

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Shareholders Equity (Total PBs)
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GENERALLY
(1) PARTICIPATION BANKS constitute a component of
the financial system in Turkey, successfuly
conveying the idle funds to the financial sector.
(2) These corporations have provided alternative
financial opportunities to manufacturers and
businessmen using credits.
(3) Working on the basis of profit and loss
sharing system, those Banks have been quite
sensitive to participating in sound
and profitable projects, thus have been affected
much lesser than other conventional banks during
financial economical crisis.
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(4) Participation Banks have been able to
distribute satisfactory returns to their
depositors (investors) who invest with them.
(5) PBs have been able to fund commercial and
industrial sectors with lower and competitive
costs.
(6) The profit and loss sharing system exercised
in the participation accounts in PBs can inspire
a new intermediation instrument in the Capital
Market
(7) Continuous and regular auditings done by the
State agencies have greatly contributed in
developing and refining the system.
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(8) PBs can play a role in drawing to Turkey the
excess Capital observed in the Gulf region.
Highly increasing oil prices have caused a
substantial accumulation of capital in the Gulf.
Post 11-September status in the USA also caused
the foreign capital to return from USA and look
for new areas for parking. Now it is possible to
attract a considerable amount of capital from
the Gulf by issuing Asset-backed Securities and
Revenue-sharing Bonds by Turkish Revenue Office.
PBs are also expecting such new financial
instruments to be unearthed without further delay.
(9) For the purpose of their short-term
liquidity requirements, PBs are also expecting
the Revenue-sharing Bonds and Asset-backed
Securities to be put into life in Turkish
economy.
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(10) In addition, PBs have taken part in
murabahah facilities extended from creditors
operating in the Gulf region, in the form of
Syndicated Loans. The lines extended in this
format have been increasing day-by- day. Till
now, a sum of 600 mio has been provided in this
new model.
(11) Global foreign experts are in the opinion
that the best and most comprehensive regulation
on Interest-free Banking Saystem has
been observed in Turkey.
(12) PBs have become indispensable institutions
of the financial system in Turkey, paralel to the
conventional depository banks. The scope of
their activities and their effectiveness will
continue to grow.
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Thank you.