Money without interest
How Islamic finance arrived in Uzbekistan — and what it changes for each of us
A UzDaily.uz special project
What it is
A bank that doesn't lend money
Let's start with the main point. Islamic finance is neither «religious money» nor charity. It is a fully fledged financial industry with a global turnover of more than 3 trillion dollars, operating in dozens of countries — from Malaysia and the UAE to the United Kingdom and Germany.
The difference from a conventional bank lies in the very philosophy of earning.
A conventional bank makes money on money. It takes deposits at one rate, issues loans at another — and lives on the spread. Money itself is the product.
An Islamic bank makes money on real transactions. It buys and resells goods, leases out property, invests in a client's business and shares the profit with them — and the losses too. Money here is only an instrument, and income is always tied to a real asset: a car, an apartment, equipment, a working business.
Hence the three prohibitions on which the whole system stands:
Riba
The ban on lending at interest. Money must not grow by itself. Any income guaranteed in advance «out of thin air» is outside Sharia law.
Gharar
The ban on excessive uncertainty. You cannot sell what does not exist, or strike deals whose terms the parties do not understand.
Maysir
The ban on gambling. No bets, no lotteries, no playing the markets.
Plus an ethical filter: an Islamic bank does not finance alcohol or tobacco production, gambling businesses, or anything Sharia classifies as forbidden (haram).
The same principle — sharing risk and relying on real assets — underpins Islamic finance.
Sheikh Ebrahim bin Khalifa Al Khalifa
Chairman of the AAOIFI Board of Trustees, at the EDB annual meeting in Tashkent
Read on UzDaily.uz →How it works
One car — two banks
Imagine: Alisher wants to buy a car for 300 million soums, but doesn't have the full amount.
Scenario 1 · Conventional bank
The bank issues Alisher a loan. Alisher buys the car himself and spends the next five years repaying the debt with interest.
If the rate changes (on a floating-rate loan), so does the payment. The bank doesn't care what the money was spent on — what matters is getting the sum back with interest.
Late payments incur penalties, and those penalties become the bank's income.
Scenario 2 · Islamic bank (murabaha)
The bank itself buys the car from the dealer, then sells it to Alisher in instalments — at a markup agreed in advance. Say, for 360 million soums over five years.
That sum is fixed in the contract once and for all: it will not grow under any circumstances. The bank here is not a lender but a seller, and it bears the risks on the goods until they are handed over to the buyer.
An Islamic bank cannot keep late-payment penalties for itself — by the rules, they go to charity.
An important caveat: instalments at an Islamic bank are not free. There is a markup, and in total cost it can be comparable to loan interest. The difference is in the nature of the deal, the distribution of risk — and the fact that the client knows the final amount from day one.
Conventional bank vs Islamic bank
The toolkit
A dictionary of the new money
The law allows Uzbek banks six types of Islamic operations. These words will soon appear in bank advertising. Tap a card to see the definition.
MURABAHA
instalment sale 63% of the MFO marketThe bank buys goods and resells them to the client at a fixed markup.
Used for: cars, appliances, housing, goods for business.
IJARA
rent / leasingThe bank buys property and leases it to the client, often with a purchase option.
While the client pays rent, the bank remains the owner.
MUDARABA
trust partnershipOne party provides the money, the other the work. Profit is shared by agreement; losses fall on the investor.
This is how investment deposits work.
MUSHARAKA
joint ventureBank and client invest in a project together and share profit and loss in proportion to their stakes.
The closest thing to direct investment in a business.
SALAM
advance payment for goodsThe bank pays up front — for example, a farmer for a future harvest.
An instrument for agriculture and manufacturing.
WAKALA
agency agreementThe client entrusts the bank to manage funds for a fee.
Coming soon to Uzbekistan
SUKUK
The Islamic counterpart of bonds. An investor finances a specific project or asset and receives a share of the income from it.
TAKAFUL
Islamic insurance built on mutual assistance: a common fund of participants covers the losses.
Fact-check
Three myths worth dispelling
Нет.
No. It is a commercial organisation that earns money — just differently. Central Bank deputy chairman Sanjar Nosirov, speaking at the Tashkent International Investment Forum, named financial literacy one of the regulator's key tasks: in his words, many people mistakenly believe Islamic finance is something entirely free and confuse it with social assistance. The murabaha markup or an ijara rental payment is the real cost of financing.
Нет.
No. A client of an Islamic bank can be a person of any faith, or none. In London, one of the Western centres of Islamic finance, many clients of such banks are non-Muslims: they are drawn by fixed payments, transparency and the ethical filters.
Нет.
No. The law created a dual model: conventional banks keep working as before, and Islamic services became an addition — through standalone Islamic banks or «Islamic windows» inside traditional ones. World experience shows both systems coexisting and competing for customers for decades.
The law
What exactly took effect on 29 June
Law ZRU-1126 was adopted on 27 March 2026 and signed by President Shavkat Mirziyoyev. Formally it amends nine acts at once — from the Civil and Tax Codes to the laws «On the Central Bank» and «On Banks and Banking». In essence, it is the legal foundation of a new industry.
A separate licence
Only organisations holding a special Central Bank licence may conduct Islamic banking. The licence is open-ended and cannot be transferred to others.
Two operating models
Both fully fledged Islamic banks and «Islamic windows» — divisions of conventional banks — may open in the country. A licensed bank may run both lines in parallel. «The law introduces new licences [for] Islamic banks and creates a dual banking system», explained Central Bank deputy chairman Sanjar Nosirov on the sidelines of TIIF-2026, calling the law's entry into force a historic event for Uzbekistan's financial system.
An Islamic Finance Council
On 15 July 2026 the Central Bank established the Islamic Finance Council — a collegial body tasked with coordinating the development of Islamic finance in the country and setting unified standards for banks, MFOs and other institutions operating on Islamic principles. The five-member council is chaired by Saidjamol Masayitov of the Fatwa Center under the Muslim Board of Uzbekistan; deputy chairman Mukhammadayyubkhon Khomidov and members Hikmatilla Toshtemirov and Abdullatif Tursunov are also Fatwa Center specialists, alongside Akhrorjon Saidullayev, managing partner at Orient Audit Group. The council drafts national Islamic-finance standards aligned with international requirements, prepares regulatory and supervisory recommendations, advises banks and MFOs, represents the Central Bank at AAOIFI, and reports annually to the Central Bank’s board. The second tier remains Sharia boards inside the banks themselves.
The right to trade
A norm fundamentally new to banking legislation: Islamic banks are allowed to engage in trade, set up companies, and acquire stakes and shares — without this, murabaha and musharaka would be impossible.
Its own taxes
The Tax Code gained a separate chapter on Islamic operations. The point is tax neutrality: a murabaha deal must not be taxed twice, otherwise Islamic products would lose to loans from the start. Penalties directed to charity can be booked as the bank's expenses.
New legal concepts
For the first time the legislation enshrines the terms «Islamic banking activity», «Islamic financial operations», «Islamic finance standards» and «investment deposit». The standards rest on the rules of AAOIFI and the IFSB, of which the Central Bank has become a full member.
History
The long road: a 20-year journey
2003–2004
Uzbekistan joins the Islamic Development Bank. The IsDB's first project lines for Uzbek banks.
2018
An approach to the ICD for help launching «Islamic windows». The draft resolution was never adopted.
2020
A UNDP–IsDB study: 61% of entrepreneurs and 75% of individuals are ready to use Islamic finance.
April 2022
The law on non-bank credit organisations allows MFOs to offer Islamic financing.
2023
The «Uzbekistan-2030» strategy makes developing Islamic finance a state objective.
2024
The Central Bank approves regulations on Islamic MFO services: murabaha, ijara, mudaraba, musharaka, salam.
2025
The draft law goes to public discussion. MFOs provide 21 billion soums of services. A Central Bank project office is created.
27.03.2026
Law ZRU-1126 is adopted. The President signs it days after Senate approval.
29.06.2026
The law takes effect. Islamic banking is officially open for business.
15.07.2026
The Central Bank establishes the Islamic Finance Council — five members chaired by Saidjamol Masayitov of the Fatwa Center under the Muslim Board of Uzbekistan.
0×
growth of Islamic MFO services in Q1 2026 versus the same period a year earlier
0 bln soums
Islamic MFO services in the first 5 months of 2026 — already more than in all of 2025
Roadmap
Plans to 2030: three stages
The reform unfolds in three stages — a sequence Central Bank deputy chairman Sanjar Nosirov set out at TIIF-2026.
Stage 1 · 2022–2026
Microfinance
MFOs became the pilot ground: regulation, standards and supervision were road-tested on them. Around 12 microfinance organisations offer Islamic instruments today. One of them works exclusively on the mudaraba model and has financed more than 300 women entrepreneurs.
Stage 2 · from 29.06.2026
Islamic banking
The launch of fully fledged Islamic banks and «Islamic windows». Central Bank chairman Timur Ishmetov said more than ten banks have begun preparations; a phased expansion of Islamic instruments is expected.
4–5 foreign banks have declared their readiness to enter the market; in June the Central Bank discussed cooperation with Qatar's MBK Holding.
0+
banks preparing
2026
first Islamic window
0
Islamic banks by 2030
0
state banks with Islamic products
Stage 3 · Ahead
Capital markets and sukuk
A legal framework for Islamic securities. Sukuk provisions are being built into the capital-markets law now in development, with a dedicated chapter for the instrument. Sukuk will let investors' money be raised for specific projects: infrastructure, energy, real estate.
Islamic finance should not be viewed as just one option for Central Asia. It must become a strategic priority.
Sheikh Ebrahim bin Khalifa Al Khalifa
Chairman of the AAOIFI Board of Trustees
Read on UzDaily.uz →The economics
How much money it could bring
The economic logic of the reform is to draw into the financial system the funds that today remain outside it.
$0 bln
expected additional investment and deposits from the law's launch
$0.0 bln
Uzbekistan's Islamic banking assets by 2033 (EDB forecast)
$0 bln/yr
the upper estimate of capital attraction (Islamic Development Bank)
$0.0 bln
Central Asia's Islamic assets by 2033 (EDB + IsDB Institute)
38%
of entrepreneurs have avoided bank credit for religious reasons
56%
of individuals have avoided bank credit for religious reasons (UNDP/IsDB)
The first money has already arrived
The EEFU fund · $100 mln to finance SMEs through Islamic instruments — backed by the IsDB Group, the Saudi Fund for Development and Uzbekistan's FRD. SEAF managing director Jan Cherim noted steadily growing interest in Islamic products in Uzbekistan.
The EDB's first deal — ijara financing for the purchase of railway wagons, approved in late 2025. The bank is also working on a sukuk issue.
In practice
What it means for you personally
If you're a depositor
A new type of deposit appears — the investment deposit. Instead of a guaranteed rate, a share of the bank's profit. The return isn't promised in advance, but the bank earns it on real transactions.
Buying a car or a home
The alternatives to a loan are murabaha (instalments with a fixed final price) and ijara with a purchase option. The practical advantage is predictability: the amount won't change if rates rise or payments slip.
If you run a business
Musharaka and mudaraba mean the bank enters your project as a partner. For farmers there's salam: money today against tomorrow's harvest. For trade — murabaha to stock up on goods. Access to financing widens for small business.
If you're an investor
On the horizon: sukuk and Sharia-compliant investment products. For a non-religious investor, Islamic instruments are essentially a class of ethical investments with an industry filter.
A significant share of Central Asia's population is still unbanked — and Islamic banking is exactly the instrument that can widen access to financial services.
Gulfairus Asayeva
Chair of the Management Board of Zaman Bank (Kazakhstan), at the EDB annual meeting
Read on UzDaily.uz →Risks
What could slow things down
Market participants and experts point to several factors that will set the industry's pace.
Talent
An Islamic banker has to understand both finance and Sharia standards. Such specialists are still scarce in the country — the regulator has been tasked with organising training and certification.
Financial literacy
Expecting «free money» is a recipe for customer disappointment. The Central Bank has named public education one of its key tasks alongside licensing.
Product pricing
At the start, with little competition, Islamic products may prove more expensive than loans. The arrival of new players could change that.
Standards and trust
The client must be confident that an «Islamic window» genuinely complies with Sharia. Much depends on the work of the Sharia boards and the Islamic Finance Council under the Central Bank.
Most countries of the region are still limited to murabaha contracts, while more complex instruments are barely represented; without a regulatory framework, trained specialists and unified standards, the volume of Islamic finance will remain limited.
Abdullah bin Haron
IFSB representative, at the EDB annual meeting
Read on UzDaily.uz →In lieu of an epilogue
29 June was not a finish line but a starting gun. The first Islamic banking products won't appear overnight: banks must obtain licences, build processes, train people. Under the regulator's plans, the first «Islamic window» should open before the end of 2026.
The direction is set. Uzbekistan, which spent two decades eyeing Islamic finance, has gone from its first microfinance experiments to a full-fledged law in four years. From here, practice decides everything: whether the new instruments become truly mainstream depends on whether they turn out profitable, understandable and honest.