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

The Central Bank of Uzbekistan has proposed approving the country's first Islamic finance standard, which sets rules for Murabaha operations in Islamic banking. The draft was put to public discussion on October 22, and comments are open until November 1. If adopted, the document will take effect from its official publication.

Under the draft, Murabaha is a financing method in which a financial institution sells goods at their original price plus a disclosed markup, including on deferred payment. A bank must first buy the goods and may not sign a Murabaha contract before owning them. The markup must be stated separately in the contract, set as a fixed sum or percentage, and cannot be changed later.

The draft also bans extra charges for late payment and separate financing commissions. Late-payment penalties may be included in contracts, but they cannot become bank income and must go to charity from a separate account. Deferred Murabaha sales of gold, silver and currencies would be prohibited.