"The draft law on Islamic finance is ready" - Deputy Chairman of the Ministry of Finance

"The draft law on Islamic finance is ready" - Deputy Chairman of the Ministry of Finance

A draft law on Islamic banking has been developed, which will be submitted to the parliament this year, said Behzod Hamroev, deputy chairman of the MB. He said that in the near future it is expected that the regulatory documents on Islamic financial services will be adopted in microfinance organizations.

In the "Uzbekistan - 2030" strategy, the task of introducing Islamic financing criteria and procedures in at least three commercial banks and forming the legal basis of Islamic financing is defined.

"This issue was raised during the President's meetings with businessmen in August 2022 and last year. Since then, a working group consisting of various ministries has been working on this matter. One thing to be aware of is that this is a very new and complex area that requires changes to many pieces of legislation, including bail laws, court laws, banking laws, and Central Bank laws. Now the draft law is ready, I said earlier that our task is to introduce the document to the parliament in 2024," said Behzod Hamroev, deputy chairman of the MB.

According to it, the law "On non-bank credit organizations and microfinancing activities" has been amended to allow the provision of Islamic financial services.

"There is order there, only the adoption of the regulation on Islamic financial services was expected. This rule was developed by the Central Bank, and now it must be registered with the state. After its acceptance, the work will begin," he said.

Also, 12 banks of Uzbekistan, including Agrobank, Uzsanoatqurilishbank, Mikrokreditbank, Ipak Yoli Bank, and others, provide murobaha services through the credit lines of the Islamic Corporation for the Development of the Private Sector. Trust Muamalat subsidiary of "Trustbank" provides Islamic leasing services.

Murobaha is a financing service for the customer by selling the goods to the nation with the condition of paying the price in installments, specifying the purchase price and the amount of the markup.

"If we complete [amendments] to the main laws in 2024, I think that this service will spread widely in other banks, taking into account the requirements and conditions," said the Deputy Chairman of the Bank of Ukraine.

In May 2018, it was planned to create Islamic banking and financing infrastructure in Uzbekistan. The document prohibits the payment of interest (ribo), the distribution of profits and losses in proportion to the share of participation in the project with the entrepreneur, the implementation of insurance activities (takaful), leasing activities (rent), operations with securities (sukuk) and other operations based on the principles of Islamic finance. it was planned to develop regulatory documents.