AlHuda CIBE has
certified first Islamic banking product based on Musharkah of Hi-Tech Bank’s
Islamic banking window operations. This will be the first product based on
Islamic finance in Uzbekistan which also has secured the approval from
Uzbekistan Central Bank and Ministry of Finance.
Musharkah is a
partnership based Financing mode under the Shari’ah law. Hi-Tech Bank has
introduced first of its kind product in Uzbekistan. According to the Islamic
finance partnership based product by the Hi-Tech Bank, a client will arrange at
least 25% funds of the project cost at his own in accordance with his business
plan and the Bank will contribute remaining 75% funds to make the project
operational.
AlHuda CIBE has
reviewed and certified as it is a Shari’ah compliant partnership based Islamic
finance product. The partnership agreement of the financing entered by the
subject of the contract followed by term of the contract, grade of the
contract, settlement procedure, share based partner, force-Majeure cases and
other conditions. In Musharakah, a joint enterprise formed for conducting some business
in which all partners share the profit according to a specific ratio while the
loss is shared according to the ratio of the contribution. It is an ideal
alternative for the interest based financing with far reaching effects on both
production and distribution. For the purpose of clarity in the basic concepts,
it will be pertinent at the outset to explain the meaning of each term, as
distinguished from the other. "Shirkah" means "Sharing" and
in the terminology of Islamic Fiqh, it has been divided into two kinds called
Shirkat-ul-milk (Partnership by joint ownership) and Shirkat-ul-Aqd
(Partnership by contract).
Mr. Muhammad
Zubair Mughal- CEO of AlHuda CIBE, expressed his views that many new Islamic
Finance markets are seen to be emerging on the horizon in the world including
Commonwealth Independent States (CIS) countries. Uzbekistan is one of the
emerging markets aggressively working for Islamic finance promotion and
implementation. The total population of Uzbekistan consists of 32 million
inhabitants and 88% of them are Muslims, which is the supportive indicator for
the growth of Islamic finance industry.
He further said
that Hi-Tech Bank has taken the step forward and introduced the first of its
kind Islamic finance product in the country which will get the first mover
advantage to tap the Islamic banking market. Moreover, Uzbekistan plans to
introduce Islamic Banking and Finance regulations which will definitely
increase the financial inclusion in the country, attract the foreign direct
investment (FDI) and will provide the new range of Banking and Financial
products in the country. The Govt. of Uzbekistan is also planning to introduce
the issuance of different tenure Sukuk (Islamic Bonds) to address the long-term
and short-term liquidity and investment requirements of Islamic finance
industry. Insurance companies are also working to start Takaful operations to
meet the need of the Islamic financial market in the country. These collective
efforts make the Uzbekistan viable for Islamic Finance which will attract the
foreign direct investment.
Mr. Zubair has
started putting his research, advisory, consultancy and capacity building
services in CIS countries for Islamic banking and finance industry from 2006
and in different countries of the world as Global CEO of AlHuda CIBE from last
15 years. He is hopeful that the volume of Islamic finance industry will
increase by 100% in next five years which will also strengthen the global
Islamic finance industry. AlHuda CIBE also certify the Islamic finance products
by offering Shari’ah certificate in order to ensure the Shari’ah compliance in
the banking transactions.