Turkish minister says state banks to offer interest-free services

Babacan did not provide the names of the two state-owned banks, but he was probably referring to Halkbank and Vakıfbank.

Turkish minister says state banks to offer interest-free services

World Bulletin / News Desk

Deputy Prime Minister Ali Babacan, who is responsible for the economy, has said two state-owned banks may offer interest-free services to increase Turkey's share in the interest-free banking sector.

The Financial Stability Board (FSB) -- an international organization established in 2009 to ensure global financial stability -- of which Turkey is a member, has launched a project to enable Turkey's two state-owned banks to offer interest-free services, according to Babacan. Babacan's remarks came in an exclusive interview with the Zaman daily.

Recalling there are four banks in Turkey that offer interest-free services to their customers, the deputy prime minister said these four banks account for just 5 percent of banking transactions in the country. However, he said, there is growing interest among people to work with banks that offer interest-free services. “We are open to any opinion that may boost the performance of participation banks,” he stated. Participation banks in Turkey are Islamic financial institutions that provide interest-free banking services.

Babacan did not provide the names of the two state-owned banks, but he was probably referring to Halkbank and Vakıfbank.

The deputy prime minister complained that loan opportunities offered by banks do indeed pose threats to Turkey's economy because people are indebted to banks very easily through loans provided even via short text messages. According to Babacan, Turkish people currently owe over TL 254 billion to banks.

Babacan said the Turkish economy between 2004 and 2006 was inclined to collapse like in Greece, but the danger was averted thanks to successful policies pursued by the government. The danger re-emerged very recently but was averted once again. “Had we not taken the necessary measures in 2011 and not lived up to those measures in 2012, the Turkish economy would have experienced events similar to those experienced by the Greek economy,” he noted.

The deputy prime minister also stated that the economy would have an even more stable course in 2013, with Turkey continuing to grow stronger in terms of its economy. “2012 was a year that was spent tidying Turkey up. We dropped inflation to the lowest level in 44 years and decreased the current account deficit (CAD) to a reasonable level,” he said and added that the government would pursue a policy to strengthen the Turkish economy between 2013 and 2015.

In addition, Babacan spoke about the economies of Turkey's neighbors and compared the Turkish economy with those countries. “Domestic demand in Greece should decrease to stabilize that economy. However, they are still enjoying prosperity they do not deserve. They have spent even though they did not produce for many years. Yet, looking at Germany, we see a totally different picture. Germany spends less than it produces. This is the reason why the eurozone leans on Germany,” he added.

Last Mod: 03 Mart 2013, 18:10
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