KYRGYZSTAN: Hot on the heels of the Kyrgyz Republic revealing it is on the hunt for partners to set up the country’s first fully-fledged Islamic bank, one of the nation’s largest conventional lenders has confirmed that it will be developing Shariah compliant financial services in partnership with a global Islamic banking brand, lending strength to the landlocked country’s Islamic finance ambitions.
BTA Bank, which amassed KGS8.12 billion (US$119.13 million) in assets as of June 2018, has reached an agreement with Bahrain’s Al Baraka Bank Group to formulate a guideline working toward the joint development of Muslim-friendly financial services in Kyrgyzstan.
Under the MoU, the Bahraini Islamic banking group, which has a geographical footprint in 14 countries, will support BTA Bank in implementing Shariah banking services, setting up the required IT infrastructure, developing regulatory instruments, training its workforce as well as raising public awareness on Islamic finance.
“This is a very significant event for us,” the bank said of the partnership. “The bank will take part in [the] implementation and development of Islamic financial services in Kyrgyzstan that will help to satisfy [the] financial need of the society in [the] future and adhere to ethical principles of the Shariah, applying the highest professional standards and sharing mutual benefits with the customers.”
Should BTA Bank begin offering Islamic products, it will be one of two out of 25 banks in the Republic to do so. The Muslim-majority market of six million has prepared itself over the last few years to introduce a Shariah compliant financial system: it had released Islamic banking provisions including a new chapter governing 10 Islamic financial contracts in the Civil Code of Kyrgyzstan and the government is considering using Sukuk to meet its funding needs. Last month, the central bank, along with the IDB, sent an open invitation seeking technical partners for a fully-fledged Islamic bank – the country’s first – and with a target capital of US$25 million, it is primed to be one of Kyrgyzstan’s largest banks.