Katılım Finans Kefalet A.Ş. Started Operations by Providing Its First Guarantee

Katılım Finans Kefalet (KFK) A.Ş., established to support the achievement of the targets set in the interest-free banking sector, to provide small and medium-sized enterprises with access to financing within the framework of participation finance principles and to make such enterprises more competitive in their sectors, has started its operations by providing its first guarantee.

Efforts are being made all over the world to increase production capacities for economic growth and employment. While the financing needed to increase production was in the past provided only through conventional banks, institutions operating within the framework of participation finance principles are now also highly active. In this context, participation finance institutions, which place moral and human values and risk sharing at their core, prioritize social justice, and create a sharing-oriented and positive social impact, have significant potential to contribute directly to economic growth. As of 2023, eight participation banks, two of which are digital, operate in the financial sector. The total asset share of participation banks in the banking sector is projected to reach 15% in 2025.

ESTABLISHED WITH THE APPROVAL OF PRESIDENT ERDOĞAN, KFK WILL CONTRIBUTE TO THE GROWTH OF THE SECTOR

To support the achievement of the target set in the sector, to provide small and medium-sized enterprises with access to financing within the framework of participation finance principles and to make such enterprises more competitive in their sectors, Katılım Finans Kefalet A.Ş. (KFK) was established on 29.03.2023 with the approval of President Recep Tayyip Erdoğan, through the partnership of the Ministry of Treasury and Finance, the Participation Banks Association of Türkiye (TKBB) and six participation banks.

KFK offers support through equity or Treasury resources to SMEs that have difficulty accessing the bank financing they need due to insufficient collateral; in this way, SMEs can implement their projects and ensure sustainability by growing their businesses.

THE MAIN GOAL IS TO FACILITATE ACCESS TO FINANCING

KFK's main goal is, in compliance with interest-free banking principles and standards, to provide support by issuing guarantees in favour of natural or legal persons in order to contribute to meeting all kinds of financing needs through guarantee and surety practices implemented in Türkiye and abroad, as well as newly developed ones suited to our country's conditions.

Katılım Finans Kefalet will contribute to strengthening the participation ecosystem by meeting the sector's guarantee needs within its own structure. Businesses operating in accordance with participation principles will be able to meet their collateral needs from the Katılım Finans Kefalet Company in the process of accessing financing.

KFK'S 2023 TARGET: TL 1 BILLION FINANCING VOLUME

As of July 2023, KFK signed a protocol with 6 participation banks and launched its first guarantee package, creating a financing volume of TL 300 million from its equity.   It aims to announce new packages that will create a financing volume of TL 1 billion by the end of 2023.

As of August 2023, companies in need of financing began to receive support through participation banks with KFK guarantees of up to TL 10 million with a maximum maturity of 12 months.

PLAQUES FOR THE EMPLOYEES OF THE BANK BRANCH THAT CARRIED OUT KFK'S FIRST TRANSACTION

KFK Board Member and Kuveyt Türk Deputy General Manager Abdurrahman Delipoyraz, KFK General Manager Ömer Karakuş and Deputy General Manager Zekeriya Altun visited the branch that received the first guarantee application and disbursed the financing, and presented plaques to the branch employees for their success and support.

KFK WILL PROVIDE THE NECESSARY SUPPORT FOR ISTANBUL TO BECOME THE CENTER OF THE PARTICIPATION FINANCE ECOSYSTEM

With its cultural heritage, geopolitical location, economic size and hinterland, Istanbul meets many of the requirements to become an international participation finance center. Moreover, drawing on our country's more than 40 years of participation finance experience, the Istanbul Finance Center is a candidate to become one of the key centers in the formation of the new financial architecture. KFK will contribute to the growth of the participation finance ecosystem by supporting alternative finance areas such as socially responsible finance and green finance, as well as projects such as financial technologies. In this process, the IFC project and participation banks achieving their desired goals are seen as an opportunity.

Source: Katılım Finans