Baku, Azerbaijan, May 17
By Fikret Dolukhanov – Trend:
Uzbekistan can create infrastructure for Islamic banking and finance in the near future, the draft resolution of the head of state published on legislative web-portal of Uzbekistan read.
The main partner and financial supporter of the project will be the Islamic Development Bank.
“Division of profits and losses between the bank and the client proportionally to the size of their contribution is achieved by using the principles of Islamic banking and finance, with the bank and the borrower becoming equal partners, interested in success and effectiveness of the project,” the document says.
In order to create alternative financing opportunities and meet the growing needs of the population and entrepreneurs, expand the range of offered banking and financial services, mobilize resources in the domestic and foreign markets, the country is planning to organize a commission on development and implementation of the principles of Islamic banking and finance.
This structure will need to create the necessary infrastructure in the republic, such as a ban on remuneration in the form of interest (ribo), sharing profits and losses with the entrepreneur proportionally to their shares in the project, as well as other principles of Islamic financing.
The Commission will also work on development of regulations on implementation of the principles of Islamic banking and financial infrastructure for insurance activities (takaful), leasing activities (ijarahs), operations with securities (sukuk) and other transactions based on the principles of Islamic financing.
The main purpose of the commission's work is to prepare a draft of the presidential decree on establishment of the Islamic Development Bank of Uzbekistan, which will have to provide a wide range of standard retail services, including export-import financing, housing and commercial real estate financing, leasing, insurance, and services in the securities market through its structural divisions.
The new bank will have to provide structured complex financial products, such as investments in venture capital, as well as direct investment and/or hedge funds, to refinance local banks in providing services for the population and business entities through Islamic financing principles.
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