KYRGYZSTAN: The IDB and the Kyrgyz government are looking for technical partners to set up Kyrgyzstan’s first fully-fledged Islamic bank, a major move by the Republic in building a holistic Islamic finance ecosystem for its six million-strong population. It is also part of the IDB’s wider Central Asian development strategy.
With a target capital of approximately US$25 million, the planned Islamic bank is slated to be one of the largest banks in the country, currently home to 25 banks including Eco Islamic Bank which offers Shariah products on a window basis. Together, the IDB and the National Bank of the Kyrgyz Republic are expected to take up majority shareholdings in the new institution.
As both parties would not be involved in the day-to-day management of the bank, they are seeking an experienced partner to invest and provide the managerial, technical and governance expertise needed.
“The technical partner would put in place the policies, procedures and IT systems for the bank to run efficiently and effectively,” according to the official invitation for technical partners as viewed by IFN. The technical partner would also have board representation.
A Muslim-majority nation, landlocked Kyrgyzstan has been actively enhancing its financial and banking infrastructure to facilitate Shariah compliant transactions; over the last few years, it had introduced Islamic banking provisions including a new chapter governing 10 Islamic financial contracts in the Civil Code of Kyrgyzstan. The country is also considering tapping the Sukuk market.
The Kyrgyz Republic’s Islamic finance focus is in tandem with its regional neighbors such as Tajikistan, Uzbekistan, Kazakhstan and Azerbaijan who are looking to diversify its funding sources and make a stronger play in the US$2 trillion global Islamic finance industry. Aiding these countries in raising their Islamic finance profile is the IDB which, through its subsidiaries such as its private sector arm and trade finance arm, is extending Islamic financing facilities to MSMEs and providing expertise to assist in the establishment of Islamic banking windows () and new financial institutions.