The National Bank of Tajikistan (NBT) hopes that introduction of Islamic banking will help restore the population’s trust in the country’s banking system.
The law on Islamic banking in Tajikistan came into force on August 5, 2014
According to Reuters, Tajik lender Bonki Rushdi Tojikiston (BRT — Tajikistan Development Bank) converted operations to become a full-fledged Islamic bank after it signed an agreement with a unit of the Islamic Development Bank (IsDB) on May 20, 2015 to advise on the transition. BRT reportedly became the first Islamic bank in Tajikistan.
The lender reportedly decided on the conversion in October 2014.
Despite strong growth in the Middle East and Southeast Asia, Islamic finance has lagged in other majority-Muslim countries often due to a lack of specific rules in what are often secular regulatory regimes.
Kazakhstan, Azerbaijan and Kyrgyzstan are among several Central Asian countries creating a more welcoming framework for the sharia-compliant banking industry.
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.
