Microfinance institutions allowed to provide Islamic finance services

Yesterday, April 20, the law “On non-bank credit institutions and microfinance activities” was signed by the President, the Ministry of Justice reported. 

According to the law, microfinance organizations, pawnshops, mortgage refinancing organizations are non-bank credit organizations.

Microfinance organizations can provide loans (up to 300 million soums), leasing, guarantees, factoring services and Islamic finance services to entrepreneurs.

The document defines Islamic finance services as financial services developed by the Central Bank in accordance with the rules of international organizations setting standards for the implementation of Islamic finance.

Pawnshops provide short-term (up to 1 year) microloans (up to 50 million soums) as collateral.

Also, according to the law, non-bank credit institutions have no right to carry out production, insurance, trade activities and attract deposits.

State regulation and supervision of non-bank credit institutions is carried out by the Central Bank.

The full text of this law, which will come into force from the date of its official publication, has not yet been published.