Microfinance organizations will begin providing Islamic financial services

In Uzbekistan, microfinance and factoring organizations will be able to provide Islamic financial services to clients with a sufficiency ratio of at least 10%, according to a government decree.

According to the information, such organizations will now be able to provide a number of services related to Islamic finance. At the same time, companies will report monthly to the Central Bank, as well as provide data on assets and liabilities, transactions with affiliates, and major risks.

Also, the capital adequacy ratio, i.e., the ratio of total equity to total assets, should be at least 10%. It is noted that now this rule will apply not only to microfinance organizations, but also to pawnshops and factoring companies.

In this case, if the asset is recognized as hopeless, the organization must save it through reserves within three business days. The Islamic financial services that organizations will be able to provide will include:

• mudaraba — financing a business in exchange for a share of the profit;
• murabaha — financing of an installment purchase;
• mushoraka — partnership with the distribution of profits and losses;
• salam — financing based on prepayment;
• Islamic lease.

Earlier, it was reported that Uzbekistan updated its economic growth forecasts. Asian Development Bank experts spoke about key risks for the country in this area.