The year 2021 has been tough for economies globally. The hard-hitting Covid-19 Pandemic has mutated and resulted in a crisis in many countries.
For most economies, it was hard enough to recover from its adverse effects lest face another wave caused by another rampant variant.
In this disastrous situation, a land-locked country in the Commonwealth of Independent States (CIS) has been striving to achieve success in inducing Islamic Finance in its economy.
Most impressively, thanks to the support of the government and regulators within the country, it has been progressing at a steady rate too.
Kyrgyzstan is bordered by Kazakhstan, China, Tajikistan, and Uzbekistan. The demographic statistics of the country show almost 90% of the population is Muslim.
Businesses and companies have paid heed to these demographics well and are now fully invested in shifting towards Islamic Finance.
It is now an emerging market for Islamic Finance as more and more professionals and individuals turn their focus towards Shariah-compliant modes of financing.
Currently, two banks are providing Islamic banking products in the Kyrgyz economy. Companies are looking forward to starting operations in Takaful as well.
More and more companies are vying for establishing themselves as the prime providers of Islamic Finance facilities.
Furthermore, two microfinance institutions are working for Islamic Banking organizations to provide Islamic Microfinance services.
Even though Kyrgyzstan was the first country among the Central Asian States to incorporate Islamic Finance in its economy, but still, the share of Islamic banking in the banking sector of Kyrgyzstan was 1.5 percent, and 0.3 percent in the microfinancing sector in 2016. In 2018, these figures increased up to 1.6 percent and 6 percent, respectively.
It has come to the government and central bank’s understanding timely that it’s not only the banking legislation that makes the Islamic principles of financing work in the country.
The government has amended the Tax Code, Customs and Civil Codes, and many other laws and policies.
It took them almost three years to pass all these amendments in the parliament and adopt them in 2016. Today the laws encourage the development of Islamic principles.
The above-mentioned figures may not seem encouraging, but Kyrgyzstan has set up a very favorable framework for Islamic Finance operations and the foundation for rapid development is complete.
Kyrgyzstan has lacked in achieving diversity in financial products and institutions providing finance to laymen, entrepreneurs, and other potential clients.
Islamic Finance products are proving to not only be appreciated by the masses but are also nurturing development in the region.
SMEs and businesses feel more confident when they understand that the financing institution is not only providing finance but is essentially the investor due to the risk-sharing nature and mechanism of Islamic Financing.
The introduction of Takaful in the mix will not only complement Islamic Banking here but also attract a huge potential customer base.
The development of diverse Islamic Finance products in the region will ultimately lead towards the development of the economy.
The human resources in the Kyrgyz economy related to Islamic Finance has developed themselves into a capable force.
It is high time to partake in the development of Islamic Finance in Kyrgyzstan and imbue professional excellence and learning.
AlHuda Center of Islamic Banking (AlHuda CIBE) conducted a consequential 2-Day Specialized Training Workshop on Islamic Banking, Islamic Microfinance and Takaful.
Multiple aspects of promoting and developing Islamic Finance in Kyrgyzstan was discussed. The training was attended by professionals of the Finance and Islamic Finance industry to enhance their knowledge about global practices and developments.
The training imparted valuable knowledge to the participants, who were keenly invested in developing their skills. The organizers expressed their elation at such a positive response from the professionals.
AlHuda CIBE further intimated their inclination to continue contributing towards the development of Islamic Finance in Kyrgyzstan.—Zawya News