Representatives of Tawhidbonk, which is the first Islamic bank in Tajikistan, note that despite the difficult situation in the world due to the COVID-19 pandemic and new challenges that negatively impacted some business segments and sectors of Tajikistan’s economy, Tawhidbonk has not suspended any development project and achieved significant positive results.
The bank’s net profit last year reportedly reached 4.4 million somonis. Compared to the previous year, Net income from financing portfolio increased more than 4 times.
Tawhidbobk’s authorized capital rose 31 percent in a year to December 31, 2021, reaching 109.2 million somonis. Over the past three years, capital growth has reportedly been 70%.
The bank’s assets reportedly rose 34 percent in a year to December 31, 2021, reaching 185.6 million somonis.
Tawhidbonk’s financing portfolio has increased more than 2 times, reaching 26.4 million somonis.
Total funding for 2021 reportedly amounted to 40 million somonis. The share of non-performing loans (NPLs) is 1.7 percent. Total deposits showed a 2-fold increase and money transfers increased by 79 percent.
Recall, Tawhidbonk, which had been established on the basis of OJSC Sohibkorbonk, was granted the license for banking operations in September 2019.
Sohibkorbonk began converting operations to become a full-fledged Islamic bank in October of 2017. Chairman of Sohibkorbonk Board Sherali Zardov and the Islamic Corporation for the Development of the Private Sector (ICD) chief executive Khaled Al-Aboodi signed a memorandum of understanding (MoU) in Dushanbe in early October of 2017.
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.
