Uzbekistan's Central Bank proposes first Islamic finance standard — Murabaha

Draft standard submitted for discussion

The Central Bank of Uzbekistan has proposed adopting the first Islamic finance standard, which establishes the procedure for conducting murabaha transactions in Islamic banking. The relevant draft resolution was submitted for public discussion on 22 October,reported the outlet Daryo.uz. The discussion will run until 1 November; if adopted, the document will take effect from the day of its official publication.

How murabaha works

According to the definition in the draft, murabaha is a method of financing in which a financial institution sells a commodity to a client, having first disclosed to the client its original cost and the amount of the markup, including in installment sales. The bank may sell the commodity to the client only after it has acquired it as its own property; concluding a murabaha contract without first acquiring the commodity is prohibited. The original price of the commodity and the bank's markup are stated separately in the contract: the markup is fixed as a firm amount or a clear percentage of the commodity's value and does not change thereafter.

Restrictions and prohibitions

The client may pay for the commodity in installments, but the bank may not add extra charges to the price due to an extension or delay of the payment deadline. It is also proposed to prohibit charging separate fees and charges for financing or for accepting a financing obligation. In the event of a late payment, the contract may provide for a penalty, but such funds do not become the bank's income: they are recorded in a separate account and directed to charitable purposes on behalf of the client. In addition, the sale of gold, silver and currency on an installment basis under murabaha is prohibited,as is the bank's buyback of a commodity belonging to the client or the client's representative, as well as any condition that ownership of the commodity does not pass to the client until all payments have been made in full.

Context: regulation of Islamic banking

This proposal builds on previously adopted rules. As Daryo.uz notes, the procedure for organizing and licensing Islamic banking in Uzbekistan was set out in a document that entered into force on 20 July 2026: it created the legal basis for establishing new Islamic banks and opening Islamic windows in conventional banks. Such organizations are required to have an Islamic financial council of at least three members, qualified senior executives, and a policy of compliance with Islamic financial standards. The outlet also reported on the establishment of a procedure for banks to transition to Islamic banking.

Why it matters

If the draft is adopted, banks and clients will for the first time receive unified written rules for murabaha transactions — a key Islamic finance instrument that operates through the sale of a commodity with a markup instead of an interest-based loan. The draft implies concrete practical changes: a fixed markup in the contract, a ban on hidden fees and on penalties going into the bank's income, and restrictions on installment sales of gold, silver and currency. This affects both the new Islamic banks and the Islamic windows of conventional banks operating since 20 July 2026, and clients choosing this type of financing. For now, the document is only at the discussion stage, and its final version may change.