Microfinance, pawnshop, and factoring companies in Uzbekistan can now officially offer Islamic financial products following a new regulation approved by the Central Bank on 20 October. This marks a significant step toward expanding access to Sharia-compliant financial services in the country.
Under the new rules, these organizations are allowed to provide a wide range of Islamic finance instruments, including mudarabah (profit-sharing business financing), murabaha (installment-based purchase financing), musharakah (partnership financing with shared profits and losses), salam (advance payment financing), and Islamic leasing (ijarah).
To ensure transparency and effective oversight, financial institutions offering these services must submit monthly reports to the Central Bank. These reports should include information on the types of Islamic financial products provided, details of their assets and liabilities, transactions with affiliated parties, and any significant risks identified during their operations.
If an asset is determined to be irrecoverable, it must be written off using reserve funds within three business days. The regulation also introduces a minimum capital adequacy ratio of 10 percent, calculated as the ratio of total equity to total assets. Previously, this requirement applied only to microfinance institutions, but it will now extend to pawnshops and factoring companies as well.
This move by the Central Bank reflects Uzbekistan’s ongoing efforts to strengthen and diversify its financial sector while promoting the growth of Islamic finance as an inclusive and ethical alternative for businesses and individuals across the country.