DUSHANBE, May 14, 2014, Asia-Plus — Members of Tajikistan’s lower house (Majlisi Namoyandagon) of parliament have endorsed a draft law on Islamic banking in Tajikistan.
A regular sitting of the fifth session of the Majlisi Namoyandagon of the fourth convocation, presided over by its head, Shukurjon Zuhurov, was held on May 14.
Presenting the draft law, the head of the National Bank of Tajikistan (NBT), Abdujabbor Shirinov, noted that the global financial and economic crisis that broke out in 2009 had made many international financial institutions pay attention to the principles of work of Islamic banking, “which has successfully overcome the crisis.”
According to him, many countries across the world, including the United States, some countries of the European Union, China, Russia, Azerbaijan, Kyrgyzstan, and Kazakhstan, have already introduced the Islamic banking principles.
Islamic banking is a banking activity that is consistent with the principles of Sharia and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam (“sinful and prohibited”). Although these principles have been applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only in the late 20th century were a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community.
Islamic banking has the same purpose as conventional banking: to make money for the banking institute by lending out capital. But that is not the sole purpose either. Adherence to Islamic law and ensuring fair play is also at the core of Islamic banking. Because Islam forbids simply lending out money at interest, Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent it. The basic principle of Islamic banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking.
Islamic banks reportedly have more than 300 institutions spread over 51 countries, including the United States through companies such as the Michigan-based University Bank, as well as an additional 250 mutual funds that comply with Islamic principles.
