Uzbekistan’s Lower House Passes Islamic Banking Bill, Sends it to Senate

Uzbekistan’s Legislative Chamber approved an Islamic banking bill in its second and final readings, advancing a landmark framework to the Senate that would legalise Sharia-compliant finance and amend the Tax Code, Civil Code and eight other laws.

The draft law defines key terms (including «Islamic bank»), sets licensing requirements, and permits Islamic banks to engage in trade-based financing and take equity stakes—activities barred under current banking rules. It recognises products such as murabaha, mudaraba, musharaka, wakala and salam, and allows conventional banks to open «Islamic windows.»

Lawmakers also backed tax adjustments to prevent trade-structured Islamic transactions from being disadvantaged by VAT and turnover taxes, and approved measures such as notary-fee exemptions for asset transfers under Islamic finance. A Council on Islamic Finance will be created at the Central Bank.

The bill passed with 125–1 (one abstention, one not voting) in the second reading and 126 votes in the final vote; the first reading on September 16 drew 112 votes «for.» Officials say the framework draws on models from Malaysia, Turkey, the UAE and regional peers. If approved by the Senate and signed by the president, the first Islamic banking products could appear within 6–12 months, according to industry estimates.

Demand is strong: a UNDP survey found 68% of the public and 60% of businesses are reluctant to use conventional banking for religious reasons. Experts call the reform «overdue» and key to mobilising both foreign and domestic investment.

Kursiv Uzbekistan also reports that Kyrgyzstan has officially launched USDKG, the world’s first government-issued stablecoin fully backed by physical gold, according to the country’s Ministry of Finance.