Three banks in Uzbekistan switching to Islamic financing

On February 4, the Legislative Chamber of Oliy Majlis held a plenary session on the draft laws. The first item on the agenda was the draft law “On introducing amendments to the Law of Uzbekistan on microfinancing”.

During the discussion, the Deputy Speaker of the House Alisher Kadirov asked the CB representative about the factors that impede the introduction of Islamic financing and the establishment of Islamic banks in Uzbekistan, Kun.uz correspondent reports.

In his speech, Kadirov said that the majority of the population of Uzbekistan is Muslims, that’s why people do not want to borrow money from the bank. He proposed to amend some articles in the legislation to introduce an Islamic financing system. He also provided an example of several developed countries where this system works successfully.

Deputy Chairman of the Central Bank Botir Zokhidov said that in 2019, a number of laws were adopted to develop the activities of banks. Therefore, the current legislation does not contain any direct restrictions on opening Islamic banks.

“At present, about 10 of our banks are financed through micro and small lines. As for retail, three banks are now switching to Islamic financing. The work in this regard is ongoing. There are various technological processes to be undertaken as part of the project. I think this year we will resolve the issue of lending in this direction,” Botir Zokhidov said.

For information, today the Islamic financing industry is one of the fastest growing sectors in the world and it incorporates innovative financing mechanisms.