Turkey’s government has moved to expand Islamic banking by inviting public banks into the sector. Earlier this month, the largest state-run bank, Ziraat, received approval to establish an Islamic unit, a landmark move in a country where public lenders have so far stayed out of the Islamic finance realm.

There are currently four private Islamic banks operating in Turkey: Albaraka Turk, Bank Asya, Kuveyt Turk and Turkiye Finans.

According to the Banking Regulatory and Supervision Agency’s decision, published Oct. 15 in the Official Gazette, Ziraat Bank got permission to set up a “participation bank” with $300 million in capital. Islamic banks are called “participation banks” in Turkey, a moniker for interest-free banking that refers to participation in profits from certain financial instruments.

Ziraat has nine months to establish the new bank. But a key question remains unanswered: Where will the capital come from? Ziraat is a conventional bank, whereas paying and charging interest is prohibited in Islam. How is a bank that charges and pays interest supposed to create a bank that rejects interest? If Ziraat’s interest-based earnings are considered illicit, how is it going to establish the capital of an interest-free bank?