Uzbekistan has taken a major step toward strengthening its financial sector by approving a new law that establishes a formal legal framework for Islamic finance. The legislation was adopted on March 27 and will come into effect three months after its official publication, marking a significant milestone in the country’s economic reforms.
The new law introduces clear regulations for Islamic banking operations, allowing financial institutions to provide Shariah-compliant services. These include profit-sharing models, investment deposits, and partnership-based financing. It also permits financial instruments such as deferred payment sales, advance payment contracts, and Islamic leasing (ijara), bringing Uzbekistan’s system in line with international Islamic finance practices.
According to the legislation, all banking activities, including Islamic finance, must be carried out by licensed legal entities. These licenses will be issued by the Central Bank without a fixed validity period and cannot be transferred, ensuring stronger regulatory oversight and stability within the sector.
The development follows earlier discussions in the Senate of the Oliy Majlis, where the draft law was approved in February. It also reflects ongoing reforms led by President Shavkat Mirziyoyev, who has been actively supporting the introduction of Islamic finance mechanisms. As part of this initiative, an Islamic Finance Council will be established under the Central Bank to supervise and guide the sector’s growth.
Uzbekistan has already begun expanding its Islamic finance ecosystem. Microfinance institutions have been permitted to offer Shariah-compliant services, provided they maintain separate accounting systems and set up dedicated oversight boards to ensure compliance.
Looking ahead, the country plans to roll out Islamic finance services in at least three commercial banks by 2030, starting with one bank by 2027. This effort is part of the broader Uzbekistan–2030 development strategy aimed at modernizing the financial system and attracting a wider range of investors.