MICROCAPITAL BRIEF: Islamic Corporation for the Development of the Private Sector (ICD) Loans $7m to Trustbank of Uzbekistan to Launch Shariah-compliant Services for Small, Medium-sized Enterprises (SMEs)

The Islamic Corporation for the Development of the Private Sector (ICD), a unit of the Islamic Development Bank (IsDB) Group, recently loaned USD 7 million to Private Joint Stock Trustbank, a commercial bank in Uzbekistan, for it to roll out Shariah-compliant financial products for small and medium-sized enterprises (SMEs). Shariah-compliant services are those that align with Islam. For example, Islamic lending uses mechanisms such as the sharing of profit and loss in lieu of conventional interest payments.

Established in 1994 under a license from the Central Bank of the Republic of Uzbekistan, Trustbank offers deposit and lending services for both individuals and enterprises as well as leasing and trade financing for enterprises. As of December 2016, it reported total assets of UZS 1.4 trillion (USD 439 million), outstanding loans of UZS 570 billion (USD 177 million) and customer deposits of UZS 1.2 trillion (USD 383 million). As of 2018, it operates nine branches.

ICD is a development finance institution that was founded in 1999 to support the economic development of its 54 member countries by financing private-sector projects, promoting competition and entrepreneurship, providing advisory services to governments and private companies, and encouraging cross-border investments. During 2017, it disbursed USD 292 million to 44 projects in 18 countries in Africa, the Middle East and Southeast Asia. As of December 2017, it reports total assets of USD 3 billion. For the year ending December 2017, it earned return on assets of -3.84 percent and return on equity of -10.26 percent.

IsDB Group, which is based in Saudi Arabia and began operations in 1975, aims to foster the economic development and social progress of its 57 member countries, as well as Muslim communities in non-member countries, in accordance with the principles of Islamic law. Its members are ICD, the International Islamic Trade Finance Corporation, the Islamic Corporation for Insurance of Investments and Export Credits, the Islamic Research and Training Institute, and the World Waqf Foundation. During the quarter ending September 2017, IsDB Group approved the disbursement of USD 8.34 billion to new projects.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

ICD press release
https://icd.africa-newsroom.com/press/signing-of-the-usd-7-million-line-of-financing-agreement-between-the-islamic-corporation-for-the-development-of-the-private-sector-icd-and-private-jointstock-trustbank-uzbekistan?lang=en

Trustbank background
https://trustbank.uz/en/about/history/

Trustbank financials
https://trustbank.uz/en/about/shareholders/reports/

ICD annual report
https://www.icd-ps.org/en/Publication#

IsDB Group background
https://www.isdb.org/isdb-group

IsDB Group data
https://www.isdb.org/what-we-do/data-group-results

MicroCapital Brief; December 19, 2016; Islamic Development Bank’s ICD, Dragon Capital to Develop Sharia-compliant Investment “Silk-way Growth Fund” for SMEs in Kazakhstan
https://www.microcapital.org/microcapital-brief-islamic-development-banks-icd-dragon-capital-develop-shariah-compliant-investment-silk-way-growth-fund-smes-kazakhstan/

MicroFinance Event; September 20, 2017; 3rd African International Conference on Islamic Finance; October 16-17, 2017; Abuja, Nigeria
https://www.microcapital.org/microfinance-event-3rd-african-international-conference-islamic-finance-october-16-17-2017-abuja-nigeria/

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