EKO - FINANCE
Helal Eco-Finance Management
Helal Eco-Finance represents an Islamic-compliant financial management approach. This management capability contributes to increasing your literacy in participation finance by implementing participation finance system methods and participation index-compliant stocks.
Participation finance institutions are financial institutions that operate in accordance with Islamic principles. These institutions offer various services by adopting interest-free finance rules. In the Halal Finance Management model, individuals and businesses can meet their financial needs with interest-free loans, interest-free deposit accounts, and other interest-free financing tools.
Participation Index-compliant stocks are an index that reflects companies' adherence to Islamic principles in their business operations and activities. Companies included in this index can operate in sectors such as halal food, health, technology, and others, in addition to adhering to interest-free finance principles. These stocks can provide investors with the opportunity to build portfolios in accordance with Islamic principles.
The Halal Eco-Finance model can assist individuals and businesses in learning about Participation Finance Institutions and Participation Index-compliant stocks, enabling them to use these tools and achieve their financial goals. Educational programs, seminars, and other awareness activities can lay the groundwork for improving Halal Eco-Finance literacy across society.
By promoting the adoption of a sustainable, ethical, and Islamic principles-based financial system, this model can support both individuals and businesses in achieving financial success while adhering to halal principles.
Principles of Participation Finance
Interest-Free Principle
Interest is the surplus obtained from the time value of the money lent.
Islam proposes a comprehensive economic system to humanity that does not allow the strong to dominate the weak, does not rely on exploitation, and is transparent and fair. In this context, interest is seen as a tool of exploitation that threatens the structure of society.
The principle of interest-free transactions forms the foundation of Islamic economics, aiming to promote halal (permissible) means of earning and establish social justice.
The concept of interest-free finance contributes to strengthening honest trade and social justice by maintaining economic balance among people.
In practice, according to the principle of interest-free finance, financial activities are conducted by raising funds based on profit and loss sharing, without committing to a fixed return. When there is a need for funds, instead of cash financing, assets are acquired and then sold to the demander on a deferred payment basis, following the principle of asset-backed transactions. Additionally, resources can be facilitated through forming partnerships on a project basis.
Based on the principle of interest-free finance, participation finance institutions offer various products such as murabaha, mudarabah, takaful, sukuk, tawarruq, istisna, salam, leasing, and participate in stock market investments in line with the participation index. In subsequent videos, we will provide detailed information about these transactions.
Transparency Principle
Islamic economic principles, in addition to the prohibition of interest, also encompass the basic principles of banning gharar (uncertainty) and jahiliyyah (ignorance). Gharar refers to uncertainty, danger, chance, or risk and typically denotes the deceptive exploitation of a customer. Jahiliyyah, on the other hand, describes the purchase of a commodity without knowledge of its type, price, or quantity.
Uncertainty about the subject of economic contracts is referred to by the term Garar, and its obscurity is expressed by the term Ignorance. In this context, economic contracts should be written on the meanings of these terms.
In Islamic finance, transparency is a principle that eliminates uncertainties in financial transactions, thereby preventing disputes, injustices, and grievances between parties. This principle lays the foundation for a fair system by ensuring the creation of clearer and more understandable contracts.
Transparency assists individuals and institutions in taking more informed steps in the financial world. By making financial decisions understandable and reliable, it enables everyone to take solid steps in the economic realm. This principle guides us as we build our financial future and contributes to advancing consciously and securely in the financial world as a strong resource.
Principle of Legitimacy
Participation means that financial transactions are valid and appropriate in legal, moral and religious terms. The principle of legitimacy in participation finance covers two basic elements:
Legal Legitimacy and Religious Legitimacy;
Legal legitimacy: Participation finance transactions must comply with the rules of applicable law. It means that the participation financial institutions that carry out these transactions carry out their activities in accordance with the relevant laws and regulations.
Religious legitimacy: Participation finance transactions must comply with the basic principles of Islamic law. This means that participation finance transactions are free from elements prohibited in Islamic law, such as interest, garar, gambling, and speculation.
The principle of legitimacy ensures that the participation finance system operates in a fair and equitable manner. Thanks to this principle, participation financial institutions and customers can carry out financial transactions in a reliable and transparent environment.
Risk and Profit Sharing Principle
It states that in participation finance transactions, risk and gain should be shared fairly between the parties.
For example, if a participation financial institution provides financing to its customer through a partnership in a business, if the business is successful, the customer and the participation financial institution make a profit together. If the business fails, the customer and the participation financial institution suffer a loss together. In this way, the risk and reward are shared fairly between the parties.
The principle of risk and profit sharing encourages participation financial institutions and customers to manage risks and rewards more carefully. Thanks to this principle, you can minimize potential losses by better managing risks.
Asset Dependency Principle
It states that participation finance transactions are based on the existence and value of the asset financed. Thanks to this principle, participation financial institutions and customers ensure that financial transactions are asset-based.
As a result, the asset-based principle constitutes the real economic basis of the participation finance system. Thanks to this principle, the participation finance system operates in a fair, equitable and sustainable manner.
The Principle of Prohibition of Speculation
The principle of prohibition of speculation is a principle developed to ensure the sustainable flow of trade. This principle aims to prevent monopolization by speculating the strong and the weak in the market and to maintain the balance in the market by increasing the chances of small businesses to survive. By supporting small tradesmen and businesses, ensuring their presence in the market through subsidies, it ensures the stability of the state and the welfare of the people by preserving the diversity of the market and competition. Without this principle, monopolization and market problems will be inevitable; This, in turn, will adversely affect the general well-being of the state and society.
Participation Finance Institutions
Participation Banking
Concept of Participation Banking
Participation banks are institutions that operate to collect funds through special and current participation accounts and to utilize these funds in accordance with interest-free finance principles. The main difference between participation banks and conventional banks lies in interest. In addition, while participation banks operate on the principle of risk sharing, conventional banks operate on the principle of risk assumption. Furthermore, asset-based transactions take place in participation banking, whereas conventional banking does not require asset-based transactions.
Power of Attorney Institution
- Customer Demand:When a customer wants to buy a certain good, he indicates that he wants to make a murabaha transaction with the participation bank or financial institution.
- Power of Attorney:The client gives power of attorney to a specific participation bank or financial institution. This power of attorney is used to buy or sell a specific good on behalf of the customer. By granting power of attorney to the bank or institution, the client allows the bank or financial institution to carry out all the operations necessary for the purchase of a particular good.
- Purchasing Process:The bank or financial institution buys a particular good at the request of the customer. This commodity is usually determined by the customer's demand and preferences.
- Resale:The bank or financial institution resells the purchased goods to the customer. This sale transaction takes place at a price set between the customer and the bank or financial institution. The price includes the purchase cost and profit share.
- Payment Plan:The customer pays the cost of the goods and the dividend to the bank or financial institution within the framework of a specified payment schedule. This payment plan can usually be in installments.
Participation Banking Activities
Fundraising Activities
Profit and Loss Participation Account
Profit and loss participation accounts are accounts formed by funds katılma hesapları, katılım bankalarına yatırılan fonların bu kurumlarca that do not pay any predetermined return to the account holder and the repayment of the principal is not guaranteed, which results in participation in the profit and loss arising from the use of the funds deposited in participation banks by these institutions. Participation accounts are accounts opened on the basis of accountability. Customers who deposit money into these accounts make a profit-loss partnership with the participation bank and share the profit obtained according to the profit sharing ratio determined at the beginning.
Special Current Accounts
Special current accounts are a type of account offered by participation banks. These accounts, which consist of funds that can be partially or completely withdrawn when desired and in return for which no return is paid to the account holder, can be in Turkish currency or foreign currency, as well as opened in the name of a real or legal person. There are no limits on these accounts.
Precious Metals Accounts
Gold Mine Account
These accounts are accounts that are opened for the purchase and sale of gold and can be used to evaluate one's savings.
Silver Mine Account
These accounts are opened for the purchase and sale of Silver and can be used to evaluate one's savings.
Platinum Mining Account
These accounts are accounts opened for the purchase and sale of Platinum and can be used to evaluate one's savings.
Fund Disbursement Activities
Murabaha
It is a sale with a declaration of profit. In today's participation banking practices, it is the transaction set or the final purchase and sale contract in this transaction set, which is based on the principle of selling a good to the customer on a deferred basis, usually in cash with the power of attorney given by the participation bank to the customer, with the instruction and promise of purchase of the customer. This is also called financial trading. It is one of the most important fund disbursement methods of participation banking.
Mudarebe
It is a labor-capital partnership. It is a type of partnership based on the principle of profit sharing, which is established by one party putting capital and the other party putting forth labor and undertaking the business. It is a fund collection and fund disbursement instrument used by participation banks. Among the fundraising instruments of participation banks, mudarebe participation accounts have the largest share. In the mudarebe transaction, the party with a surplus of funds invests the surplus funds in the participation bank mudarebe pools, which collect funds to evaluate them in a certain term. The sharing rate is determined by prior agreement between the two parties. These funds accumulated in the pools are directed to different investments and the amount of profit obtained from these investments is transferred to the relevant pools and the amount of profit falling to the capital owner is paid in line with the bank sharing rate. It is also used as a financing instrument on the fund disbursement side.
Musharakah
A partnership, also known as a capital partnership or profit-loss partnership, is a partnership established by two or more individuals to do business together and share the profit or loss that will occur by putting a certain amount of capital. Musharakah, which is used as a fund disbursement method in participation banking, is realized through the participation bank becoming a partner in the project in question in some project financings. However, since the establishment and expertise of banks is not business administration, instead of taking a direct role in the management of the business, they leave the management to the other party with expertise in the project field. In this type of financing method, the participation bank also undertakes the risk of loss of the project or the problems that may arise from the project partners, but also has the opportunity to provide high returns and directly contributes to the country's economy and employment.
Iccare
It is a type of contract that allows the interest of an asset to be assigned to the party who undertakes to pay the rent for a certain period of time. In participation banking, Icare is used in products and services such as leasing, subleasing, service financing, safe deposit box leasing and rent-based banking services.
Selem
It is called a sale when a company or individual in need of cash sells a standard product that it has not yet produced for a cash price to be delivered in the future. Although seleme, which is among the participation banking products, is not currently used as a publication, it is a method that can be used especially in the financing of agricultural products.
İstisna
The exception, also called a work contract, refers to contracts made to manufacture a work with specified qualifications for a certain fee. The exception contract deals with products that require construction/manufacturing. In these contracts, the qualifications, quantity, maturity of the work and the price of the product to be made must be determined. Participation banks can benefit from the exception agreement in the completion of unfinished cooperatives, the financing of mass housing, contracting works, and the financing of large construction works such as vehicles, ships and aircraft.
Sukuk
Definition
One type of financial certificate is an investment certificate. It is a type of security that is issued to finance all kinds of assets and/or rights and enables its owners to have rights in proportion to their share of the revenues obtained from this asset and/or right. Income is derived from assets that comply with the principles of interest-free banking (for example, the rental of real estate).
Condition of Existence Basis
Sukuk consists of renting something to another person. Here, in order not to fall into interest, the thing to be rented must exist concretely. A property right must have arisen, and this property right is rented in the sukuk.
Key Features and Benefits
Sukuk Operation and Types
Types of Sukuk by Issuance Management
Project Indexed Sukuk
Sukuk generally has three main usage areas. In project-indexed sukuks, sukuk is issued to finance a planned project.
Asset-Indexed Sukuk
In asset-indexed sukuks, funds are obtained by selling the right of earnings to be obtained from the assets owned by the companies to the investors.
Balance Sheet Indexed Sukuk
In balance sheet-indexed sukuks, sukuk is issued to provide funds for more than one project.
Sukuk Types Based on Structure
Murabaha Sukuk
Murabaha Sukuk, a sale transaction where a commodity is sold at a price that includes an agreed-upon profit margin added to its cost. In this type of sukuk, the issuer of the certificates is the commodity murabaha seller, the purchaser of the murabaha is the buyer of the commodity, and the fund represents the cost of purchasing the commodity. Certificate holders own the murabaha commodity and have the right to the final selling price when the commodity is resold. For Murabaha-based sukuk to be legally valid, they must only be traded in the primary market.
Musharaka Sukuk
Musharaka Sukuk are used to finance an existing business based on a partnership agreement or to establish a new project. Holders of the certificate become owners of the project or activity in proportion to their shares. Although ownership over illiquid assets is acquired by holding these certificates, Musharaka bonds possess liquidity as they can be bought and sold in the secondary market. In other words, Musharaka certificates function as negotiable instruments and can be traded on secondary markets.
Mudaraba Sukuk
Mudaraba, providing capital through management support under profit-loss sharing arrangements for any kind of venture, drawing a structure similar to venture capital. Mudaraba (capital-labor partnership) sukuk is the name given to certificates issued when a bank opts to issue certificates to fund the financing support it provides to an entrepreneur. Accordingly, mudaraba represents a profit-sharing agreement between the bank and the entrepreneur. In exchange for transferring the funds obtained from the sale of certificates to the entrepreneur, the bank obtains the right to partnership in the profit generated from the professional activities conducted by the entrepreneur, at pre-agreed rates. However, in the event of an increase in the market value of the asset underlying the sukuk over time, the sukuk holder does not have any rights.
Ijara Sukuk
Ijara (Leasing, Lease Financing) sukuk is a lease agreement where the right of usufruct (use) of the property subject to the lease agreement passes from the owner of the property to the contract holder. The term "ijara" here refers to the rent paid to the owner of the property. Resembling financial leasing to a large extent, ijara sukuk grants the lessee the right to purchase the leased asset at the end of the lease period. However, ijara sukuk holders may also have the right to receive rent from the asset in addition to ownership rights over the asset. Ijara sukuk can be negotiable and traded on secondary markets, and even if the leased asset becomes unusable due to accident or disaster, the lessee may cancel the ijara contract. However, in current practices, leased assets are typically insured against such situations.
Salam Sukuk
Salam (Selem) Sukuk involve transactions under the concept of future sale, where the price of the goods is paid in the spot market, but delivery occurs at a later specified date. Through agreements, the subject, price, and delivery date of the trade are precisely determined. If the goods are not delivered on time, the buyer can either reclaim their payment or choose to wait until delivery is made. Salam Sukuk resemble forward contracts, a derivative product. In a Salam Sukuk contract, a seller commits to delivering a specific commodity at a predetermined future date and receives payment upfront. However, forward contracts involve uncertainty and interest, making them prohibited in Islamic law. Therefore, to eliminate uncertainty, conditions such as full payment of the commodity's price upfront, a fixed delivery date, and the inability to resell the commodity before its maturity have been introduced in Salam Sukuk.
Istisna Sukuk
Istisna Sukuk are certificates issued to raise funds for the production of yet-to-be-manufactured goods. The certificates are of equal value. The issuer of the certificate is the seller of the asset, i.e., the producer, while the certificate holders are the owners of the goods to be produced. Additionally, it may be possible for the party undertaking the production to subcontract the relevant work to a subcontractor at a different price.
Sukuk Differences
Differences of Sukuk from Stocks
Sukuk provides a partnership right over the relevant asset, while a stock provides a partnership and ownership right over all assets. The obligation that the asset subject to Sukuk and the income derived from this asset must comply with the rules of Islamic law is not for stocks. The main criterion that distinguishes it from Sukuku stock is; The sukuk does not include interest, which is prohibited in Islam, and does not have excessive uncertainty. A stock represents a debt obligation, while a sukuk represents an ownership right over assets. Therefore, the sale of the stock means the sale of the debt, and the sale of the sukuk means the sale of the asset share.
Differences of Sukuk from Traditional Bonds/Bills
While traditional bonds are a debt-backed instrument, sukuk, an Islamic bond, provides asset-backed financing. Sukuk indicates the right to own or benefit from an asset. The claim in Sukuk is not only the right to cash flow, but also the right to property. This differentiates sukuk from traditional bonds. While traditional bonds consist of interest-bearing securities, sukuks are basically investment certificates that consist of the right of ownership in a basket of assets.
Similarities and Differences of Sukuk and VDMK
The issuance of Sukuk is quite similar to the issuance of asset-backed securities (VDMK). Both have a source institution in need of financing, a special purpose financial institution carrying out the issuance process, and investors who want to earn returns. In the issuance of VDMK, the source institution transfers its receivables to the special purpose organization. On the other hand, the special purpose institution provides funds from investors by issuing VDMK based on these receivables and transfers the funds it obtains to the source institution. While the source institution makes the principal and interest payments at certain maturities, the special purpose institution makes the repayments to the investors. The difference between the Sukuk issuance and the above process is that the source institution transfers a tangible asset, such as real estate, to a special purpose institution instead of its receivables, and makes periodic rental payments instead of interest payments in the second part.
Similarities and Differences of Sukuk GOS
Similarities; They are in the real economy and project-based. They use it in large infrastructure and superstructure projects of a tangible nature. Differences: There is a guarantee/risk of providing income above the inflation rate committed by the state. If inflation and interest rates are not reduced, the prices of these services (bridges, electricity...) must be increased in order to realize the real income promised to those who buy promissory notes.
Participation Investment Funds
Participation Fund Definition
Participation Funds are investment funds developed for investors who prefer to invest their funds in non-interest bearing investment instruments. The portfolios of Participation Funds include participatory accounts, partnership shares, lease certificates, gold and other precious metals, and other capital market instruments approved by the Capital Markets Board that are non-interest based.
Participation Fund Types
Participation-Based Individual Pension Plan Funds
Individual Pension Plan is a private savings system aimed at providing individuals with income during retirement in addition to the existing public social security system. Based entirely on voluntary participation, this system is also supported by government contributions. The goal here is to ensure that individuals can maintain their living standards during retirement by making regular savings. Any individual who has reached the age of 18 can participate in this system, and upon reaching the age of 56, provided they have been in the system for at least 10 years, they become eligible for retirement. Those not covered by any social security system can also join the individual pension system.
Participation-Based Equity Funds
We can define the stocks offered to the investor in accordance with the principles of participation banking as participation shares. A stock is a security that represents the ownership of a part of the issuing company and refers to a shareholding. Stocks, which form the basis of many individual investors' portfolios, are marketed by publicly traded companies and traded on stock exchanges. Some of the investors who trade in the stock market want their income to be in accordance with Islamic principles. The financing provided by investors with this sensitivity is evaluated in the participation indices consisting of companies operating in accordance with the principles of participation banking.
Participation-Based Lease Certificate Funds
It is under the name of sukuk in participation banks. Definition of Sukuk; One type of financial certificate is an investment certificate. It is a type of security that is issued to finance all kinds of assets and/or rights and enables its owners to have rights in proportion to their share of the revenues obtained from this asset and/or right. Income is derived from assets that comply with the principles of interest-free banking (for example, the rental of real estate).
Participation-Based Discretionary Funds
Since the fund is a participation hedge fund, investment forecast
In line with both the domestic and foreign public and private sectors that are not based on interest
also foreign currency denominated money and capital market instruments, lease certificate
(SUKUK), participation accounts, partnership authorized by the Advisory Committee
Their shares will be joined by gold, silver and other precious metals
To make capital gains by investing in contracts and to increase the value of the portfolio
aims to increase.
Participation-Based Gold Funds
Participation-Based Gold Funds allocate at least 80% of the total value of the fund continuously to gold and gold-based capital market instruments, while up to 20% can be allocated to lease certificates, participation accounts, partnership shares included in the Ziraat Participation Index, partnership shares approved by the Advisory Board, and gold and other precious metals. Interest-free foreign investment instruments may be included in the fund portfolio. However, foreign currency and capital market instruments included in the fund portfolio cannot exceed 80% of the total value of the fund.
Participation-Based Hybrid Funds
Participation-Based Hybrid Funds allocate a minimum of 40% of the fund portfolio, provided it is traded on Borsa Istanbul, to lease certificates issued by the Ministry of Treasury and Finance of the Republic of Turkey, and a minimum of 10% to shares in participation indices calculated by Borsa Istanbul A.Ş. The remainder consists of other non-interest-bearing assets in accordance with the limitations specified in Article 2.4 of the prospectus, adjusted based on changing market conditions.
Participation Banks operating in Turkey
AlbarakaTürk Bank
Albaraka Turk, as a participation bank, was established in 1984 as a pioneer in interest-free banking in Turkey and started to serve actively in 1985. Albaraka Group B.S.C., one of the strongest capital groups in the Middle East, continues its activities in Turkey in accordance with the Banking Law No. 5411 as a participation bank established under the leadership of the Islamic Development Bank (IDB) and a domestic industrial group that has served the Turkish economy for more than half a century.
Türkiye Emlak Participation Bank
After the years of the national struggle, it was established in 1926 under the name of Emlak ve Eytam Bank with the signature of Mustafa Kemal Atatürk in order to undertake the reconstruction of the young Republic of Turkey, to support construction initiatives and to protect the rights of orphans. In the first years of its establishment, it undertook projects such as the New Parliament building, the Turkish Ocağı building and the Central Bank building, which are among the most outstanding examples of the First National Architecture Period. The bank, which carried out the construction of Bahçelievler Houses, the first housing project of our country, also set the first example of the housing loan financing model with the system used in this project. Later, he made a great contribution to the reconstruction and development of the country with Saracoğlu District, Levent Residences, Koşuyolu Neighborhood and other symbolic structures that were implemented all over the country. The bank, which has changed its name many times over the years due to the changing needs of the country, continued its journey as Emlak and Eytam Bank, respectively, under the names of Türkiye Emlak Kredi Bankası and Türkiye Emlak Bank. Türkiye Emlak Katılım Bankası, which was decided to serve as a participation bank again in 2018, received an operating license in 2019 and continues to serve today with its 95-year long history and team of bankers who are experts in their fields. Türkiye Emlak Katılım Bankası will develop sustainable and accessible financing models in the economic cycle extending from producers to consumers for strategic sectors that have a high contribution to economic growth and employment, especially the construction sector. In addition, Türkiye Emlak Katılım Bankası believes that it will make significant contributions to the growth of participation banking and increase its share in the sector by offering new product and service models to participation banking, and is working for this purpose.
Hayat Finans Participation Bank
"As Hayat Holding, whose foundations were laid in 1937, Hayat in the fast-moving consumer goods sector; We are a global player with 67 companies operating in different sectors, especially Kastamonu in the wood-based panel sector and Limaş in the port management sector, and more than 17,000 employees." In today's world, where the digital age affects all sectors and triggers the transition between these sectors, we decided to invest in the financial sector and Hayat Finans Participation Bank was established with a capital of 1,500,000,000 TL. Under the umbrella of the Holding, they deliver 49 Turkish brands produced with advanced technologies in 17 countries to millions of consumers around the world. With the vision of globalization and sustainable growth, they continue to invest in Turkey and in the world to create benefits for generations. It is a Participation Bank that set out with the slogan "The first digital bank with 100% Turkish capital in 25 years!". As Turkey's first branchless digital bank, Hayat Finans verbally undertakes that it will provide services through mobile and internet banking with its uninterrupted service approach and technological infrastructure, and that it will provide new generation banking services as well as basic banking services such as Commercial Banking, SME Banking, Retail Banking, Treasury Transactions, Investment Banking and Private Banking. They want to provide an experience that will not tear people away from life with projects that will guide digital banking by making the right technological investment moves. They always want to satisfy their customers who prefer Hayat Finans with a reliable, simple, innovative, fast, transparent approach and with all the developments of technology and that providing solutions to your financial needs is their most essential duty. They want to realize their vision of being a bank that keeps life uninterrupted with the digital ecosystem created by our collaborations and technology platforms. "On March 23, 2023, we received our operating license from the Banking Regulation and Supervision Agency. We started to provide you with cost-free service through our mobile application. Very soon, we will also be providing services through internet banking." They carry out public information activities.
Kuveyt Türk Participation Bank
Kuveyt Türk has been carrying out its activities in the field of interest-free finance since its establishment on March 31, 1989. Kuveyt Türk contributes to the development of participation finance with its dynamic corporate governance approach, innovative products offered to its customers and overseas expansion. Bringing its distinguished financial products and services together with savers and investors effectively, Kuveyt Türk maintains its leading position in the sector with its customer experience-oriented approach, technology-innovation studies and the steps it has taken towards digital transformation. Participation ranks first in finance and 10th in the sector. Kuveyt Türk, which is next, ranks first among participation financial institutions in terms of funds collected, funds disbursed and asset size, and 10th in the entire banking sector. In addition, it maintains its first place among participation financial institutions in gold banking and third place in the entire banking sector.
T.O.M. Participation Bank
TOM Bank, established by Turgut Aydın Holding Group, has officially received its operating license by the BRSA as of March 31, 2023. It works devotedly to provide the best service to its customers. It is a digital participation bank.
Türkiye Finans Participation Bank
Türkiye Finans offers innovative and high value-added products, services and solutions to a wide range of customers in the commercial/corporate banking and retail banking segments. Türkiye Finans; It was established in 2005 when "Anadolu Finans", which was established in 1991 as the first private financial institution with 100% domestic capital, and "Family Finans", which provided participation banking services under the name of "Faisal Finance Institution" between 1985 and 2001, joined forces. These two institutions joined forces in 2005 with the mission of creating more value for Turkey and reinforcing their competitive advantage. The merger of Anadolu Finans and Family Finans was officially registered by the decision of the Banking Regulation and Supervision Agency (BRSA) dated December 28, 2005, and the name of the bank was changed to "Türkiye Finans Katılım Bankası A.Ş." on December 30, 2005. The merger gave a new growth momentum to participation banking, and Türkiye Finans became one of the largest participation banks in Turkey in a short time. With the acquisition of SNB, one of the largest capital banks in the Middle East region, Türkiye Finans has gained a new and strong corporate identity and brought a breath of fresh air to participation banking, whose target audience is gradually expanding. The biggest period of change and breakthrough for Türkiye Finans started with the acquisition of 60% of its shares by the National Commercial Bank (NCB) on March 31, 2008. On October 11, 2020, National Commercial Bank decided to merge with Samba Financial Group, and on April 1, 2021, the merger was completed and the name of National Commercial Bank was changed to Saudi National Bank. Saudi National Bank is the controlling shareholder of Türkiye Finans, in which it holds a 67.03% stake. Türkiye Finans: The future-facing face of participation banking: Shaping its targets and growth roadmap in line with the principles of participation banking, Türkiye Finans aims to do so with a customer-oriented approach; It continues its activities with the aim of continuously improving its technological infrastructure, business processes and service approach. Continuously digitizing its services with fast, uninterrupted and excellent customer experience in line with its integrated channel strategy, Türkiye Finans continues to invest in technology and offers a wide range of transactions and services to its customers in its distribution channels. As of 01.01.2024, Türkiye Finans is taking firm steps towards sustainable growth and offers innovative and high value-added products, services and solutions to a wide range of customers in the commercial/corporate banking and retail banking segments with its 3,823 employees, 305 branches and a strong service platform consisting of effective alternative distribution channels.
Vakıf Participation Bank
In essence, participation banking refers to financial systems and institutions that carry out banking activities with the "Interest-Free Principle" and carry out fund collection, fund disbursement and other banking transactions in accordance with the Interest-Free Banking Principles and Standards and the decisions of the Interest-Free Banking Advisory Committee. In participation banking activities; Banking transactions are carried out in accordance with the Principles of Interest-Free Banking based on contracts such as Labor-Capital Partnership (Mudarebe), Capital Partnership (Musharakah), Consumption Loan (Karz), Investment Power of Attorney, Financial Trading (Murabaha), Leasing (Ijâre), Surety, etc. Within the scope of the Regulation on Credit Transactions of Banks published in the Official Gazette under the heading of Fund Disbursement Methods of Participation Banks, Sales Methods, Leasing Methods, Partnership Methods, Proxy Methods and Other Methods (Gratuitous Loan (Karz-ı Hasen), Surety, Guarantee, Promise, Promise of Reward (Cuâle) types and other methods to be determined by the Board) are determined as the services that can be offered within the scope of Participation Banking.
Ziraat Participation Bank
Ziraat Participation always stands by its customers with its products in accordance with the principles of participation banking and alternative distribution channels. Ziraat Participation, which listens to its customers under all circumstances and adopts the basic philosophy of offering solutions specific to them, operates not only for its customers and shareholders, but also to carry out activities that will add value to the society and all its stakeholders.
Digital Participation Banking
Hayat Finans Participation Bank
Founded in 1937 as Hayat Holding, operating in the fast-moving consumer goods sector, Hayat has become a global player with 67 companies and over 17,000 employees operating in various sectors, including the wood-based panel industry with Kastamonu and port management with Limaş. In today's digital age, where all sectors are affected and the interchangeability between these sectors is triggered, a decision has been made to invest in the financial sector, leading to the establishment of Hayat Finance Participation Bank with a capital of 1,500,000,000 TL. Under the umbrella of the holding, they distribute 49 Turkish brands produced with advanced technologies in 17 countries to millions of consumers worldwide. With a vision of globalization and a sustainable growth approach, they continue to invest to create benefits for generations in Turkey and around the world. With the slogan "The first 100% Turkish-owned digital bank after 25 years!", it is a Participation Bank that has embarked on a journey. As the first branchless digital bank in Turkey, Hayat Finance will provide services through mobile and internet banking with its uninterrupted service approach and technological infrastructure. They verbally commit to providing basic banking services such as Commercial Banking, SME Banking, Personal Banking, Treasury Operations, Investment Banking, and Private Banking, as well as next-generation banking services. They aim to provide an experience that keeps people connected to life by making the right technological investment moves to shape digital banking with projects. They consider it their primary duty to provide solutions to your financial needs with a reliable, simple, innovative, fast, and transparent approach, keeping humans at the center of their perspective. They aspire to constantly satisfy customers who choose Hayat Finance with a customer-centric approach. They seek to realize their vision of being a bank that sustains life seamlessly with the digital ecosystem created by collaborations and technology platforms. On March 23, 2023, we received our operating license from the Banking Regulation and Supervision Agency. We have started providing cost-free services to you through our mobile application. Soon, we will also be providing services through internet banking." This is how they inform the public through their communication efforts.
T.O.M. Participation Bank
TOM Bank, established by Turgut Aydın Holding Group, has officially received its operating license by the BRSA as of March 31, 2023. It works devotedly to provide the best service to its customers. It is a digital participation bank.
Islamic Economic Models
In the Islamic economy, there is a right of private property in the means of production and consumption. There is a free market economy in which personal gain and freedom of enterprise are encouraged. Trade is free within certain limits. Remuneration is formed by mutual consent under free market conditions according to the job or skill. Competition is limited as a result of the principle that "a believer is a brother of a believer". ahilik is one of the artisan organizations established for this reason.
Profit Sharing and Risk Management
There are systems and ways in Islam that allow one to evaluate one's assets, which are used instead of interest. These systems and ways are based on profit share, not interest, and are shaped according to people's mutual understanding of trade. Profit sharing, on the other hand, can be different rates and types in different systems. The most well-known of these are the Musharakah and Mudarebe systems, which are used with the same method, although their names are not known among the public. In the Musharakah system; It is a profit and loss partnership, a partnership established by two or more individuals to do business together and share the profit or loss by putting a certain amount of capital. Mudarebe, on the other hand; It is a system based on profit partnership at certain rates, in which one party assumes capital and the other party undertakes labor. The person who puts labor in the mudarebe is not responsible for the damage, the damage is completely undertaken by the capitalist. Risk management, on the other hand, is done by the people themselves or with consultancy companies. In this risk management, it is the process of investing capital in shares, gold funds, sukuk issuances and other instruments, taking into account compliance with the Participation Finance Index.
Legal Framework and Supervision
Islam Economics (Participation Banking) started its operations in 1985 under the name of "Private Finance Institutions". These institutions were included in the scope of the Banking Law with an amendment to the Banking Law in 1999. In this context, in 2001, an association called the Association of Private Finance Institutions (ÖFKBİR) was established as an umbrella organization of all Private Finance Institutions to discuss and solve the problems of these institutions, to take a common stance, to protect, develop and grow the sector, and to develop legislation, standards and regulations. Thus, a union similar to the Banks Association of Turkey (TBB) was formed. The most troubled year for Private Finance Institutions was 2001. Because someone from the sector (İhlas Finance Institution) used the funds it collected in violation of the legislation, both entering a payment crisis itself and putting the sector in trouble.The size of the industry has halved and almost reached the point of bankruptcy. In the process, the state had to intervene in a financial institution. Subsequently, a Trust Fund similar to the Savings Deposit Insurance Fund (SDIF) was established, in which all Private Financial Institutions were included. Thus, the savings of real persons were covered by insurance up to a certain amount. Thanks to this trust fund, the sector was relieved and started to grow with a certain momentum again. Private Finance Institutions were renamed Participation Bank with the newly enacted Banking Law in 2005. The transition to the status of a 'bank' and was called 'Participation Bank' was a turning point for these institutions. In the process, the name of the Association of Private Finance Institutions (ÖFKBİR) was changed to the Participation Banks Association of Turkey (TKBB) and the Trust Fund merged with the SDIF.With these developments, participation banks started to continue on their way with their new names. Today, participation banks, like all banks, are subject to supervision by public authorities such as the Banking Regulation and Supervision Agency (BRSA) and the Central Bank of the Republic of Turkey (CBRT).
Benefits of Participation Finance
Overcoming income inequality; rapid and sustainable development and development of society and the state. Minimizing problems such as unemployment by implementing real economy systems, customer orientation is a money-oriented system as a result of the fact that participation institutions and organizations are customer-oriented and provide them with the necessary initiatives, installments in a way that will put people and institutions in a difficult situation, penalties in the delay periods in installments, long-term durability, transparency and inclusive governance where is your money in participation institutions? You can see where it is used and which transactions it is subject to, and you can set restrictions and follow them in parts such as where these transactions will be made and how much profit they will bring.
Participation Finance Awareness and Its Effects
With the increase in the awareness of Participation Finance, the further development of participation institutions and the benefits of these institutions to individuals and institutions, the evaluation options of your capital, and to increase the freedom of society and people by opening new options and new arms to both people with interest sensitivity and those who are not interest sensitive.