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THE ROLE OF ISLAMIC FINANCE IN PROMOTING FINANCIAL INCLUSION IN
UZBEKISTAN
Anorqulova Mastura Sadirjon kizi
Teacher at the ISFT institute
mail:
Abstract
: Islamic finance is getting to be increasingly prevalent all through the world as a
workable substitute monetary framework that regards the ethical and devout feelings of Muslims.
Islamic banking offers a calculated chance to make strides in monetary incorporation in countries
like Uzbekistan, where a sizable area of the people is still unbanked and abused by customary
money-related education. The potential commitment of Islamic funds to growing Uzbekistan's
access to monetary administrations is inspected in this exposition. Employing a desk-based
technique, the ponder analyzes current investigations, develops controls, and hones worldwide
best practices. It highlights vital issues like regulation capability, open numbness, and limited
legitimate systems.
It moreover draws consideration to potential, such as growing political backing, intrigue from
universal financial specialists, and developing open requests. The creation of a money-related
foundation that complies with Sharia law, administrative changes, and open mindfulness
activities are a few of the arrangement thoughts.
Keywords:
islamic finance, financial inclusion, financial development, Islamic microfinance,
islamic art, Muslims.
1. Introduction
One of the most powerful powers behind financial development is monetary consideration, or the
accessibility and utilization of formal money-related administrations by both people and
undertakings. Uzbekistan still has challenges coming to unbanked populations in spite of
headways in money-related segment changes, particularly in country districts and among people
who have devout sensitivities to conventional interest-based budgetary items (World Bank,
2022).
Sharia-based money-related items, including risk-sharing, interest prohibition (riba), and
instability shirking (gharar), are given by Islamic funds (El-Gamal, 2006). Muslim communities
trying to find ethically sound financing may discover it engaging since it incorporates a variety
of instruments like Ijara (rent), Murabaha (cost-plus financing), and Mudarabah (profit-sharing)
(Ali, 2011).
This exposition investigates what vital measures are required for the development of Islamic
banking and how it seems to offer assistance to Uzbekistan in accomplishing its objective of
expanding budgetary consideration.
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2. Literature Review
Islamic banking has extended rapidly on a worldwide scale, with resources surpassing USD 3
trillion by 2022 (IFSB, 2023). With noteworthy authoritative backing and public-private
participation, countries such as Malaysia, Indonesia, and the joined-together Middle Eastern
Emirates have viably joined Islamic back into their standard budgetary frameworks (Zin et al.,
2020).
Islamic back and monetary consideration: Islamic funds have appeared to be valuable
instruments for budgetary consideration, especially in regions with a larger part of Muslims. The
IMF (2021) claims that Islamic microfinance organizations have played a noteworthy part in
making a difference in low-income and rustic communities in countries like Bangladesh and
Sudan.
Obstacles in Creating Markets: In numerous creating countries, Islamic banking experiences
troubles in spite of its potential because of hazy directions, a need for Sharia administration,
lacking item advancement, and low client mindfulness (Obaidullah and Khan, 2008).
Setting of Uzbekistan: With the assistance of collaborations with the Islamic Development Bank
(IsDB) and eagerness to order laws relating to Islamic managing an account, Uzbekistan has
illustrated an expanding interest in Islamic finance (IsDB, 2022). Be that as it may, ordinary
banks proceed to overwhelm its money-related division, advertising a little determination of
Islamic items.
3. Methodology
This considered utilizing a desk-based, subjective technique, looking at auxiliary information
from:
Distributions from organizations that give Islamic money
World Bank, IMF, and Islamic Development Bank reports
The lawful and established establishments of Uzbekistan
Advertise, investigate, and academic distributions.
The analysis's fundamental objectives are to pinpoint the impediments that must be evacuated
and the potential commitment Islamic funds might make to extending access to monetary
administrations.
4. Findings and Discussion
4.1 Islamic Finance's Potential for Money-Related Consideration The majority-Muslim populace
of Uzbekistan can have their devout inclinations obliged by means of Islamic money-related
administrations. Little undertakings and clients in need of financing that acclimates with Islamic
standards might advantage significantly from items like Murabaha and Ijara (Ali, 2011).
Also, Islamic microfinance can give ethically sound and comprehensive substitutes for
conventional advances, especially for lady agriculturists, casual specialists, and trade proprietors.
(IFSB, 2023).
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4.2 The Show Circumstance of Uzbekistan's Islamic Fund In Uzbekistan,
Islamic art is still exceptionally youthful. A few progressions have been accomplished by:
Foundation and instructive activities supported by IsDB Islamic microfinance pilot programs
(IsDB, 2022).
To empower Islamic managing of account operations, draft enactment is being checked on (CBU,
2023).
Commercial banks haven't, however, set up completely utilitarian Islamic backups or windows,
all things considered.
4.3 Execution Challenges
Administrative deterrents incorporate the need for Sharia administration systems and a particular
Islamic way of keeping money control (IMF, 2021).
Regulation Capacity: Insulant talented staff in item structure and Islamic monetary standards
(Obaidullah and Khan, 2008).
Open Mindfulness: Imminent clients have little information about Islamic monetary
administrations (Zin et al., 2020).
Advertise Preparation: Because of the perceived complexity and costs, conventional banks may
well be hesitant to grow their item offerings.
4.4 Opportunities and Enabling Factors
Political Support: The Uzbek government has communicated an extraordinary interest in
progressing Islamic finance and has marked participation agreements with the IsDB.
External Organizations: To progress capacity and draft controls, universal organizations can give
specialized offers of assistance (IsDB, 2022).
Statistic Demand: The Muslim community includes a solid want for monetary products that
follow Sharia law.
5. Conclusions and Recommendations
In Uzbekistan, Islamic finance provides a way to extend money-related consideration that's both
ethically and socially satisfactory. Its precepts are in line with the convictions of a sizable parcel
of the masses and offer a way to bring money-related administrations to underprivileged
regions.
Recommendations:
1. Embrace Comprehensive Law: Make a system of laws custom-fitted to Islamic law that covers
authorizing and oversight.
2. Make Sharia Sheets: Make certain that all Islamic banks have Sharia admonitory sheets that
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are qualified.
3. Empower Monetary Education: Begin open mindfulness campaigns with respect to the
preferences of Islamic funds.
4. Capacity Building: Teach controllers and bank workers about Islamic fund concepts. 5.
Advance Advancement: Help with the creation of Islamic fintech items for online keeping
money and microfinance.
The Islamic fund has the potential to altogether contribute to Uzbekistan's increased financial
incorporation with the proper regulation arrangement and administrative backing.
References:
1.
Ali, S.S., 2011. Islamic Micro and Medium Enterprise Finance: Exploring the Role of
Islamic Financial Services in Promoting Financial Inclusion. Islamic Development Bank, Jeddah.
2.
CBU, 2023. Central Bank of Uzbekistan Annual Report 2022. [online] Available at:
https://cbu.uz
3.
El-Gamal, M.A., 2006. Islamic Finance: Law, Economics, and Practice. Cambridge
University Press.
4.
IFSB, 2023. Islamic Financial Services Industry Stability Report 2023. [online] Islamic
Financial Services Board. Available at: https://www.ifsb.org
5.
IMF, 2021. Islamic Finance: Opportunities, Challenges, and Policy Options. [online]
International Monetary Fund. Available at: https://www.imf.org
6.
IsDB, 2022. Islamic Development Bank Annual Report 2022. [online] Available at:
https://www.isdb.org
7.
Obaidullah, M. and Khan, T., 2008. Islamic Microfinance Development: Challenges and
Initiatives. Islamic Research and Training Institute.
8.
World Bank, 2022. Uzbekistan Financial Sector Assessment Program Update. [online]
Available at: https://www.worldbank.org
9.
Zin, R.H.M., Muhammad, J. and Ahmad, A., 2020. Financial inclusion through Islamic
finance: Opportunities and challenges. Journal of Islamic Monetary Economics and Finance, 6(1),
pp.129–150.
