Uzbekistan moves toward Islamic banking with new draft law

TASHKENT, Uzbekistan (MNTV) — Uzbekistan is preparing to introduce Islamic banking into its financial system, with lawmakers advancing a draft law designed to expand access to credit, diversify financial instruments, and draw foreign investment.

The draft legislation was approved in its first reading during a plenary session of the Legislative Chamber of the parliament. Lawmakers said the measure reflects a broader effort to support citizens and entrepreneurs while creating conditions for new financial products and services.

If enacted, the bill will amend the Tax and Civil Codes, along with eight other laws, to formally define key concepts such as “Islamic bank,” “financial operations and standards,” and “investment deposit.” It will also establish a licensing framework for institutions seeking to operate under Islamic finance principles, setting out both eligibility requirements and permissible financial transactions.

Islamic banking, which prohibits interest-based lending and emphasizes profit-and-loss sharing, has expanded across the Middle East, South Asia, and parts of Africa as a system viewed by many as more equitable and inclusive. 

For Uzbekistan, adopting this framework could increase financial accessibility for segments of the population that prefer Sharia-compliant products, while also attracting investment from Gulf and Asian economies where Islamic finance is well established.

Lawmakers argue that introducing such alternatives alongside traditional banking will help diversify the country’s financial landscape. 

Supporters say the reform could also strengthen ties with international Islamic finance institutions, unlock new credit channels for small businesses, and encourage long-term savings by offering products tailored to different community needs.

The draft law has so far cleared its first stage in parliament. Further readings and amendments are expected before full adoption. If approved, it would mark a significant step in aligning Uzbekistan’s financial sector with global trends in Islamic banking, reflecting both domestic demand and international investment opportunities.