The Microloan Fund (MLF) IMON has got a license to offer services to its customers through Islamic banking windows.
The National Bank of Tajikistan (NBT) granted a license to offer services through Islamic banking windows to MLF IMON on January 29 this year, according to the NBT press center.
The NBT notes that services will be offered through the “Islamic window” exclusively in the national currency.
MLF IMON is expected to offer Islamic small loans through small loans through the “Islamic window.”
While an Islamic bank is one based on and managed with Islamic principles, an Islamic window refers to the services provided by a conventional bank but based on Islamic principles.
Headquartered in Khujand, IMON is a microloan fund offering individual and solidarity group loans to micro-entrepreneurs in urban and rural Tajikistan.
Recall, Tajik central bank granted license for banking operations in Tajikistan to the first full-fledged Islamic bank in the country, Open Joint-Stock Company (OJSC) Tawhidbonk, last year.
By decision of an annual meeting of shareholders OJSC Sohibkorbonk was converted into OJSC Tawhidbonk on June 12, 2019.
The law on Islamic banking in Tajikistan came into force on August 5, 2014.
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.
