President signs law on Islamic banking in Uzbekistan

Uzbekistan has officially established the legal framework for Islamic banking. On March 27, the president signed a law introducing amendments and additions to several legislative acts aimed at implementing Islamic banking in the country.

According to the report, the law was developed by the Central Bank in cooperation with local and international experts, taking into account international standards and best foreign practices.

The law introduces amendments to the Tax Code, the Civil Code and seven other laws.

In particular, the law introduces into legislation the concepts of Islamic banking activities, Islamic financial operations, Islamic finance standards and investment deposits.

It also establishes a licensing system granting the right to conduct Islamic banking activities, with clearly defined requirements for obtaining such licenses.

The document outlines a list of Islamic financial operations that may be carried out by banks holding a license for Islamic banking.

Banks engaged in Islamic banking activities are also permitted to conduct trade operations directly, as well as to establish legal entities and acquire shares or stakes in companies without restrictions.

In addition, Islamic finance councils will be established within the Central Bank and commercial banks to coordinate matters related to Islamic finance, along with defined requirements for their operations.

The law also sets out specific features of taxation related to Islamic financial operations.

The law will enter into force three months after its official publication.

Earlier, it was reported that an Islamic Finance Council would be established under the Central Bank to ensure systematic governance in the sector.