“It is high time to introduce Islamic financial services in Uzbekistan” – Shavkat Mirziyoyev

While addressing the parliament, President Shavkat Mirziyoyev said that it is high time to introduce Islamic financial services in Uzbekistan.

“It is time to create a legal framework for the introduction of Islamic financial services in our country. Experts from the Islamic Development Bank and other international financial institutions will be involved in implementing a relevant project,” the President said.

It should be noted that Islamic finance is one of the fastest-growing sectors in the world today and includes innovative financing mechanisms.

This system of financing differs from traditional banks, it involves the sharing of profits and losses and financing based on real assets.

Islamic banks can build the facility, bring in equipment, goods, raw materials or lease them at the request of the customer. Funding is based on trade practices. In the modern banking system, the implementation of commercial operations of banks is difficult from the legal point of view, which is hampered by tax and regulatory documents related to banking.

In recent years, the total assets of Islamic financial institutions amounted to $2.5 trillion, growing by 15-20% per year.

According to a survey conducted by the United Nations Development Program in early 2020 on the analysis of Islamic financial products in Uzbekistan, the main reasons for non-use of bank loans were religious beliefs, high interest rates and the complexity of lending. If Islamic financial institutions were established in the country, the majority of respondents in the above survey noted that they would use the services of these institutions. Even traditional banks have expressed their views on the establishment of Islamic financial institutions in Uzbekistan, the emergence of fair and transparent competition in the financial sector, which will lead to an increase and diversification of investment flows into the country.