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On the capital market side, CMB is the main institution regulating capital markets and
instruments as well as lease certificates (Sukuk) in Turkey with supplementary roles of Borsa
Istanbul (BIST) and Takasbank (clearing house). The first regulation on lease certificates and
asset leasing companies (special purpose vehicle for Sukuk issuance) were issued by the CMB in
2010. In the following years, CMB issued developmental amendments on the regulation. Another
Islamic instrument introduced by CMB is called real estate certificates, which are developed for
funding the construction of housing estates. The CMB doesn’t have a separate department for
Islamic finance nor a Central Shari'ah Board for capital markets.
The Ministry of Treasury and Finance is the sole regulatory actor for licensing, regulating, and
supervising the overall insurance sector. The Ministry has two separate departments for
regulating and supervising the industry. The first is General Directorate of Insurance and the
second is Insurance Supervision Board.
The existing regulation on Takaful in Turkey was issued in 2017 by the Ministry of Treasury and
Finance (Resmi Gazete, n.d.). The Regulation on Working Principles and Procedures of
Participation Insurance (No. 30186) mainly regulates the operating models and the governance
of Shari'ah Advisory Committee. The rest falls under the common legislation (Insurance LawNo.
5684) with conventional insurance. The Regulation has two emphases: one is about technical
issues, and the second one is on compliance and governance.
There is a requirement for the separation of the risk fund and shareholders’ fund in the
Regulation. On the other hand, there is general statement regarding the Shari’ah compliance
requirement for the investment, operations and products. The Regulation is delegating the
responsibility of Shari’ah compliance to the Shari'ah Advisory Committee. The Supervisory
authority implements an on-site inspection for this kind of issues. Qualifications of the members
of the Shari’ah advisory committee are not regulated. This is in the discretion of Takaful
companies in current practice.
TOs have the obligation to follow both participation and conventional insurance regulation,
which has solvency, capital adequacy, risk quantification and valuation rules. All insurance
companies including TOs are required to follow IFRS standards.
One of the important features of the Regulation is that it regulates institution-level Shari'ah
Advisory Committee for Islamic finance in Turkey. The Regulation first defines the institutional
level Shari'ah Advisory Committee in Article 3 as “Committee that monitors the operations of
participation insurance system in respect of compliance to the participation finance principles and
common risk sharing and principles of cooperation” (Resmi Gazete, n.d.). Then, in Article 8, it
clarifies the position in the organizational chart of TO as “The Committee shall be attached to the
company’s board of directors.” (Resmi Gazete, n.d.).
Finally, the duties and responsibilities of the institutional level Shari'ah Advisory Committee are
stated in the Regulation (Article 8):