Uzbekistan is preparing to introduce Islamic banking after the Senate approved legislation creating a legal framework for Sharia-compliant financial services, a move authorities say could broaden financial access and attract new investment into the country’s economy.
The law sets out licensing requirements, taxation mechanisms and supervisory structures for Islamic financial institutions, allowing banks to operate fully under Islamic principles or offer specialised “Islamic windows” alongside conventional products. Officials expect the reform to support the development of the digital economy, expand financing options for businesses and improve inclusion for citizens who avoid conventional banking for religious reasons.
Islamic finance is based on principles derived from Islamic law, which prohibit interest-based lending and speculative transactions. Instead of earning profit through interest, financial institutions generate returns through asset-backed trade, partnerships and risk-sharing arrangements.
Several key models are outlined in the new legislation:
• Murabaha – a cost-plus financing model in which a bank purchases goods and resells them to a client at an agreed profit margin, often used in trade and consumer financing.
• Mudaraba – a profit-sharing partnership where one party provides capital and another manages the business, with profits divided according to a pre-agreed ratio.
• Musharaka – a joint investment structure in which both the bank and client contribute capital and share profits and risks.
• Wakalah – an agency arrangement allowing a financial institution to manage investments on behalf of a client.
• Salam – a forward-sale contract frequently applied in agriculture, where payment is made in advance for goods delivered later.
Authorities say these mechanisms could help diversify Uzbekistan’s financial market and provide alternatives to interest-based loans, particularly for small and medium-sized enterprises.
The Central Bank will establish a specialised Islamic finance council to oversee compliance with Sharia standards and coordinate regulation across the sector. Amendments to the Tax Code introduce a dedicated regime for Islamic financial operations, including VAT exemptions on certain transactions, aimed at reducing costs and encouraging market entry.
Officials estimate that Islamic banking could unlock up to $5 billion in annual financing potential once fully operational. A survey conducted by the United Nations Development Programme (UNDP) found that 68% of Uzbekistan’s population and 60% of businesses prefer financial services aligned with religious principles, highlighting significant unmet demand.
The reforms follow earlier efforts by the Central Bank to align national legislation with international standards and draw on the experience of countries such as Malaysia, Türkiye and the United Arab Emirates. Uzbekistan joined the Islamic Financial Services Board in 2025 to strengthen regulatory cooperation and attract strategic investors from Islamic finance markets.
Analysts say the introduction of Islamic banking could mobilise both foreign capital and domestic savings, supporting long-term growth in sectors such as infrastructure, trade and entrepreneurship. If regulatory procedures move forward as planned, experts expect the first Islamic banking products to appear within six to twelve months.
European leaders gathered in Dublin on Thursday, 12 November, for the ninth European Political Community (EPC) summit, with security, defence and e...
Afghan and Russian businesses signed 15 trade agreements worth $103 million in Kabul on Thursday during a visit by Russian Deputy Prime Minister Al...
Rising demand for air cargo and expanding international aviation networks are opening up new trade opportunities for Central Asia and the South Cau...
UN Secretary-General António Guterres delivered a stark warning at this year's COP31 summit, saying the climate crisis iss advancing faster than governments' efforts to contain it.
European leaders gathered in Dublin on Thursday, 12 November, for the ninth European Political Community (EPC) summit, with security, defence and energy high on the agenda. Azerbaijani President Ilham Aliyev held talks focused on peace, trade and regional cooperation.
Here's your AnewZ Daily Brief for 11 November. Today, we cover Russia-Ukraine peace talks, political tensions in Washington, strikes in Spain, espionage allegations involving Nvidia's CEO, and climate negotiations at COP31 in Türkiye.
Four million workers across Spain joined a general strike on Wednesday over the country’s deepening housing crisis, unions said, bringing disruption to factories, ports, shops and public transport just weeks before a snap general election.
Iran has unveiled a new underground missile and drone base, warning that it will respond forcefully to any attack, as tensions persist with the U.S. and oil tankers continue to be struck by naval mines in the Strait of Hormuz.
Afghan and Russian businesses signed 15 trade agreements worth $103 million in Kabul on Thursday during a visit by Russian Deputy Prime Minister Alexei Overchuk, Afghanistan’s government said.
Rising demand for air cargo and expanding international aviation networks are opening up new trade opportunities for Central Asia and the South Caucasus, as countries invest in airports and strengthen their roles in global supply chains.
Kazakhstan’s security service has arrested Nurlan Zhakupov, CEO of Samruk-Kazyna, the country’s sovereign wealth fund, on suspicion of corruption. Yelzhas Otynshiyev, Chairman of KTZ, Kazakhstan’s national railway firm has also been detained.
An Israeli airstrike on Nasser Hospital in southern Gaza has killed at least six people, including a surgeon, and wounded 20 others, according to Gaza’s civil defence service.
The competitiveness of international trade depends on how efficiently goods move across borders. These issues are in focus at the 22nd International Exhibition of Transport and Logistics – TransLogistica Uzbekistan 2026, taking place in Tashkent, Uzbekistan, from 10 to 12 November.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment