Union of Chambers and Commodity Exchanges of Turkey

The Global Participation Finance Summit (GPAS ISTANBUL 2017), held under the auspices of the Republic Presidency organized by the Turkish Chamber of Commerce and Industry (TOBB), the Association of Independent Industrialists and Businessmen (MUSIAD) and the Turkish Participation Banks Association (TKBB) with support from the Prime Ministry Undersecretariat of Treasury, the Central Bank of the Republic of Turkey, the Banking Regulation and Supervision Agency (BRSA), the Capital Markets Board (Turkey), Religious Affairs Department and the Council of Higher Education (YÖK), was held at the Istanbul Haliç Congress Center. TOBB President M. Rifat Hisarciklioglu said in his speech that Islamic religion emphasized social justice from the very first day, saying, “The establishment of justice, in line with this principle and wisdom of Islam, is primarily the duty of Muslims. Today, unfortunately, income inequality throughout the world is continuing, not decreasing. Poverty is becoming a growing problem; there is no amelioration. Most Muslim countries are affected.”

Turkey has taken important steps in the sense of improving the participation system. The institutional structure of Participation Banking has been strengthened. New participation banks were established with public support. New instruments like participation insurance have been passed down. Eventually, the participation banking sector doubled in growth compared to classical banking in the last 10 years (06-16). In this period, the asset size of the banking sector increased 6 times, while participation banks grew 13 times over. Its share in the financial system increased from 3% to 6%. For 2025, they have very ambitious goals. This ratio increases to 15%, which is a target that excites and motivates us as the real sector. Because, of loans given in the classical banking sector, the share of SMEs is 25%. In case of participation banking, this ratio is 35%. Participation banks work more closely with SMEs. Their growth, in fact, means SMEs' growth as well as facilitation of access to finance. Tte trend in this direction is strengthening throughout the world.”

- What did TOBB accomplish in this field?

As TOBB, Hisarcıklıoğlu said that especially SMEs took important steps, which provided loans with no interest or very low interest rates, saying:

"With the support and initiatives of the President of the Republic, Prime Minister and Minister Mr. Mehmet Şimşek, the projects came into being in 2017, giving vital support to SMEs. The gears of the economy were made to turn. First, Chambers-Exchanges in 81 provinces and TOBB brought together all their resources. We reached an agreement with the banks and provided 10 lira of new credit for SMEs for every 1 lira we collected. The loan interest rate is 9.9% per annum, the lowest interest rate ever applied to commercial loans. When we take inflation into consideration, it was essentially a zero-interest loan at that time. So far, the real interest rate is even less.

We took the second step with the Ministry of Industry. Through KOSGEB, a 50,000 TRY, interest free loan with a 3-year maturity has been made available. In step 3, Credit Guarantee Fund (KGF), the co-founded by TOBB, has increased its credit guarantee volume with the support of the Government. The credit guarantee limit of the KGF has been increased to 250 billion liras. Together, these three projects, have been utilized by a total of 653,000 companies -the majority of which were SMEs- were able to use a total of 232 billion Turkish liras in bank loans throughout Turkey.

The number of active companies in Turkey is approximately 1.2 million. Thus, TOBB and the Chamber-Exchange community have enabled access to interest-free credit to 1 out of every 2 enterprises. With the President’s announcement, we have made an innovation in financing. We now want to see similar steps from our banks. We are waiting for their support in the fight against high interest from them.”

Deputy Prime Minister Mehmet Simsek said in his speech, “I especially urge participation banks: Let's forget the easy way out, let's create a business model that includes more innovative, real-meaning partnerships. You will see all kinds of support in this regard.”

Şimşek said that the world needs a finance model of participation. Minister Mehmet Şimşek noted that in the past several centuries, the traditional system has ran into excess and has caused havoc in the real economy when it fell into crises and that these crises have been experienced yesterday in the traditional system and that they can be experienced today and tomorrow.