Observer Report
Dubai
AlHuda CIBE has certified first Islamic banking product based on Musharkah of Hi-Tech Bank’s Islamic banking window operations. This will be the first product based on Islamic finance in Uzbekistan which also has secured the approval from Uzbekistan Central Bank and Ministry of Finance.
Musharkah is a partnership based Financing mode under the Shari’ah law. Hi-Tech Bank has introduced first of its kind product in Uzbekistan. According to the Islamic finance partnership based product by the Hi-Tech Bank, a client will arrange at least 25% funds of the project cost at his own in accordance with his business plan and the Bank will contribute remaining 75% funds to make the project operational.
AlHuda CIBE has reviewed and certified as it is a Shari’ah compliant partnership based Islamic finance product. The partnership agreement of the financing entered by the subject of the contract followed by term of the contract, grade of the contract, settlement procedure, share based partner, force-Majeure cases and other conditions. In Musharakah, a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution. It is an ideal alternative for the interest based financing with far reaching effects on both production and distribution. For the purpose of clarity in the basic concepts, it will be pertinent at the outset to explain the meaning of each term, as distinguished from the other. “Shirkah” means “Sharing” and in the terminology of Islamic Fiqh, it has been divided into two kinds called Shirkat-ul-milk (Partnership by joint ownership) and Shirkat-ul-Aqd (Partnership by contract).
Muhammad Zubair Mughal- CEO of AlHuda CIBE, expressed his views that many new Islamic Finance markets are seen to be emerging on the horizon in the world including Commonwealth Independent States (CIS) countries. Uzbekistan is one of the emerging markets aggressively working for Islamic finance promotion and implementation. The total population of Uzbekistan consists of 32 million inhabitants and 88% of them are Muslims, which is the supportive indicator for the growth of Islamic finance industry.
He further said that Hi-Tech Bank has taken the step forward and introduced the first of its kind Islamic finance product in the country which will get the first mover advantage to tap the Islamic banking market. Moreover, Uzbekistan plans to introduce Islamic Banking and Finance regulations which will definitely increase the financial inclusion in the country, attract the foreign direct investment (FDI) and will provide the new range of Banking and Financial products in the country. The Govt. of Uzbekistan is also planning to introduce the issuance of different tenure Sukuk (Islamic Bonds) to address the long-term and short-term liquidity and investment requirements of Islamic finance industry. Insurance companies are also working to start Takaful operations to meet the need of the Islamic financial market in the country. These collective efforts make the Uzbekistan viable for Islamic Finance which will attract the foreign direct investment.
Mr. Zubair has started putting his research, advisory, consultancy and capacity building services in CIS countries for Islamic banking and finance industry from 2006 and in different countries of the world as Global CEO of AlHuda CIBE from last 15 years.
