Uzbekistan Prepares Legislation for the Introduction of Islamic Banking

Tashkent, Uzbekistan (UzDaily.com) — Uzbekistan is developing a legal framework to facilitate the growth of Islamic banking.

On 15 September, the UzLiDeP faction discussed a draft law proposing amendments and additions to a number of legislative acts aimed at creating conditions for the operation of Islamic financial institutions in the country.

Currently, existing legislation limits the use of key Islamic finance instruments. Commercial banks are prohibited from directly participating in trade activities or establishing joint ventures, whereas the Islamic model presupposes active partnership and trade-based financing.

The new draft law is designed to remove these barriers and align the national legal system with international standards, including the requirements of AAOIFI and IFSB. Adoption of the law will regulate the activities of Islamic banks and “Islamic windows,” expand access for individuals and businesses to alternative financial services, and attract foreign investment.

According to UN Development Programme data, 68% of Uzbekistan’s population and 60% of business representatives do not use conventional banking services due to religious beliefs, making the introduction of Islamic banking particularly relevant.