Diversification of Islamic Financial Insturments
107
documented some of the issues that may need to get addressed in realizing this potential.
These include: formation of an official Shariah board to regulate and supervise the
development of Islamic financial instruments, promoting academic research and involving
educational institutions to study the related issues, media campaign to help improve the
general public perceptions about Islamic banking and further diversification of financial
instruments (Aslan, 2015).
Regulatory and Legal Framework
The Banking Law No. 5411 (BL) allowed establishment banking Regulation and Supervision
Agency (BRSA) as the main body responsible for the supervision and regulation of the banking
industry as well as financial leasing, factoring and consumer financing companies in Turkey.
The other authorities that also have a role in the regulation and supervision of the financial
system are:
1) Undersecretariat of Treasury has a primary function to manage the public assets and
liabilities. It regulates and supervises the insurance sector.
2) Banking Regulation and Supervision Agency (BRSA) has been established as a body with
full administrative and financial autonomy to implement all measures for the purpose of
protecting the rights and interests of depositors, maintaining confidence and stability of
the financial markets. It is the primary body to regulate and supervise the banking sector.
3) Capital Market Board (CMB) defines the capital market activities and types of institutions
allowed to operate in capital markets. It has been empowered for the setting of the
necessary conditions to be met by the financial and banking institutions.
4) Savings Deposit Insurance Fund (SDIF) is an autonomous public institution to build
confidence and provide stability to the financial markets. The body is also responsible to
safeguard the rights of the depositors.
5) Central Bank of the Republic of Turkey performs the traditional functions of a central
bank, including issuance of bank notes, implementation of monetary policies, managing
gold and fore reserves and matters related to price and financial stability of the system.
In addition to the above official bodies, The Participation Banks Association of Turkey
(PBAT)82 is a private professional organization with its separate legal identity to help promote
and develop interest-free banking in the country. It was founded in 2001 and it is primarily
responsible in articulating the vision and approach in promoting and developing the role of
participation banks. It is mandated to develop relations between participation banks and
other public institutions to address the needs of the participation banks. It also looks after the
development of product range and service quality of the industry and is the key body in
facilitating coordination with industry stakeholders. Based on the strategy document prepared
by PBAT (2015), the organization will play a pivotal role in restructuring its role to bring
necessary competence. The membership is mandatory to all participation banks. PBAT has
82 PBAT is a private professional institution. PBAT is member of the “Interest-Free Finance Coordination Board”, established
officially by the Prime Ministry in December 2015.