MICROCAPITAL BRIEF: IsDB Group’s Islamic Corporation for the Development of the Private Sector (ICD) to Assist Kapitalbank in Developing Shariah-compliant Financial Services in Uzbekistan

The Islamic Corporation for Development of the Private Sector (ICD), a Saudi Arabia-based multilateral institution, recently announced an agreement with Kapitalbank, an Uzbek commercial bank, to provide the bank with technical support in developing Islamic financial services in Uzbekistan. One aspect of Islamic lending is that, to comply with Shariah, concepts such as sharing profit and loss replace conventional interest payments.

The new relationship will involve ICD training and otherwise supporting Kapitalbank staff in areas such as Shariah, accounting practices and information technology. Kapitalbank’s Acting Management Board Chairman, Oleg Kim, stated that through the development of Shariah-compliant services “financial inclusion can be promoted and bring a larger pool of savings in the local and global economy.”

Kapitalbank is a private commercial bank in Uzbekistan that was established in 2000. Its main goals are “the active development of corporate and investment banking business, conquering [the] fast growing SME [small and medium-sized enterprise] sector and expansion of the number of services to retail customers.” As of March 2019, Kapitalbank reported total assets of UZS 4.86 trillion (USD 569 million) and total equity of UZS 515 billion (USD 60 million).

Founded in 1999, ICD is dedicated to supporting the development of the private sector through investments that follow Shariah principles. In 2018, the organization approved 19 projects valued at USD 483 million in industries such as finance, energy and mining. During the year 2017, ICD enabled funding to 9,370 micro-, small and medium-sized enterprises. The organization is a member of the Islamic Development Bank (IsDB) Group and is owned by IsDB; 53 countries; and five public institutions, including the National Bank of Algeria and the Saudi Public Investment Fund.

By Eugene DeCosse, Research Associate

Sources and Additional Resources

ICD press release
https://icd-ps.org/en/news/icd-and-kapitalbank-sign-a-bilateral-agreement-to-develop-islamic-finance-in-uzbekistan

ICD homepage
https://icd-ps.org

ICD annual reports
https://icd-ps.org/en/publications

Kapitalbank homepage
https://kapitalbank.uz

Kapitalbank financial statements
https://www.kapitalbank.uz/en/shareholders/financial-indicators/accounting/

MICROCAPITAL BRIEF: AlHuda, Azerbaijan’s SER Agree to Promote Islamic Finance in the Caucasus
https://www.microcapital.org/microcapital-brief-alhuda-azerbaijans-ser-agree-promote-islamic-finance-caucasus/

Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at http://www.microcapital.org/products-page/.