Fitch outlines timeline for Islamic banking launch in Azerbaijan

Azerbaijan’s central bank plans to introduce an “Islamic windows” model in the near term, while the creation of standalone Islamic banks will be considered at a later stage, Fitch Ratings said in a report.

According to the agency, two banks in Azerbaijan began testing Islamic financial products in the first half of 2026 under the central bank’s regulatory sandbox. The pilot phase is expected to continue until 2027.

The Central Bank of Azerbaijan says it is also preparing the necessary legal framework. Central bank governor Taleh Kazimov previously said a package of laws on Islamic finance could be adopted in 2026.

Fitch said the development of Islamic banking in Azerbaijan is supported by reforms and growing investor interest from Gulf countries. However, the sector remains at an early stage and will require further legislative support and greater public trust to grow.