A model was presented to the Advisory Board of TKBB to apply T.R. Central Bank's export-incentive rediscount credit transaction in participation banks, and the model was found in compliance with the principles and standards of participation banking by the Board in ruling number 3 which is dated 02.11.2018. However, after meetings and discussions with CBRT representatives and participation banks, as it was not possible for the participation bank to sign a surety due to its own law in the CBRT Instruction which would constitute the basis for the decision, it has been reported that there is a need to make a change in the way of the endorsement (endorsement in full) of the customer bill. A reconsideration or confirmation of the Board Decision is requested about this new situation.
Upon examination of the final version of the model submitted to the Advisory Board, it is understood that the participation bank cannot follow the principle of buying the goods from the producer and selling it to the exporter customer (murabaha) as the representative of the T.R. Central Bank in the transaction of the exporter, who needs financing to buy the goods from the domestic market. The proxy authority given by the Central Bank to the participation bank in the transaction does not include the authority to buy and sell. The participation bank is seen as a debtor who receives interest-bearing loans in this relationship. And the financial transaction between the Central Bank and the participation bank turns into an interest-bearing loan relationship. Hence, it is not permissible for participation banks to mediate such a transaction.
Whereas in the model allowed with the decision of the Advisory Board dated 02.11.2018 and numbered 3, T.R. Central Bank was in the position of the seller and the participation bank in the position of the proxy and guarantor in the murabaha agreement; in this new request; however, the Central Bank is stated to not be a party in the murabaha agreement. Thus, the participation bank can not be a proxy for the Central Bank that will not be a party in this transaction. As such, the relationship between the Central Bank and the participation bank is not permissible since it has turned into an interest-bearing loan relationship.
It is permissible for participation banks to mediate this transaction when T.R. Central Bank does not demand an interest in rediscount credits it has extended.
Rediscount credits extended by T.R. Central Bank without demanding any surplus are found permissible as they constitute only a loan (qard) transaction.
Allah knows the best.