Uzbekistan mulls introducing Islamic banking
Experts are confident that the Islamic financial services will be in high demand.
Thoughts in Uzbekistan have turned to introducing Islamic banking services — a notion unthinkable only a few years ago.
A decree detailing the proposal was posted on a government website on May 16 and has already generated considerable, largely positive, response.
In June 2017, the Central Bank refinancing rate was set at 14 percent. The rates offered by banks to business and retail customers in turn vary at annual rates from 14 percent to 30 percent, depending on the type of loan.
The draft legislative bill envisions the creation of a commission to develop the ground rules for Islamic banking, which in its essence does away with the concept of interest rates in favor of a system whereby the lender shares in profits and losses of any given project being financed. The commission will also be tasked with outlining regulations on insuring, leasing and other financial services.
Financial analyst Navruz Melibayev said this heretofore unorthodox form of banking will find a receptive market in Uzbekistan.
“Considering that the vast majority of Uzbekistan practices Islam, I would presume that Islamic banking services will be in high demand,” Melibayev told Eurasianet.
The comments section under the draft bill appear to reflect that view so far.
“Reading this draft bill, I practically shed tears. I wanted to take out a mortgage on a house. But the interest rate is so big and I was going to write a letter to the president about it. Glory be to Allah that you will now be able to buy a house on credit without interest,” one commenter, Nurmuhammad Sotvoldiev, wrote on the government website.
Sign up for Eurasianet's free weekly newsletter.