Two Uzbekistani joint-stock commercial banks, Bank Asaka and Asia Alliance Bank, recently signed memoranda of understanding with the Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank, to provide credit lines in support of lending that follows Islamic law, also known as Shariah. While the maximum ICD will lend to Asia Alliance Bank has not yet been established, Asaka has been authorized to borrow up to USD 7.5 million. The credit lines are for lending to the private sector, including small and medium-sized enterprises (SMEs). Islamic law prohibits investment in activities such as alcohol and gambling. It also prohibits traditional interest charges, which are often replaced with a profit-sharing arrangement. Both borrowing institutions are regulated by the Central Bank of Uzbekistan.

Asaka, which was founded in 1995, reported total assets of UZS 23.5 trillion (USD 2.9 billion), a gross loan portfolio of UZS 17.8 trillion (USD 2.2 billion) and customer deposits of UZS 8.2 trillion (USD 1 billion) as of 2017. Asaka operates 26 branches in Uzbekistan as well as 83 “mini banks.”

Asia Alliance Bank was founded in 2009. As of 2017, it had total assets of UZS 1.4 trillion (USD 173 million), a gross loan portfolio of UZS 789 billion (USD 97.7 million) and customer deposits of UZS 674 billion (USD 83.4 million).

Founded in 1999, ICD is a multilateral organization that is based in Saudi Arabia. It is dedicated to supporting the development of the private sector through investments that follow Shariah principles. As of 2017, the organization, which has authorized capital of USD 4 billion, is owned by the Islamic Development Bank; 53 countries; and five public financial institutions, including the National Bank of Algeria and the Saudi Public Investment Fund.

 

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