Kazakhstan to introduce Islamic financing services through traditional banks
Kazakhstan’s Agency for Regulation and Development of the Financial Market (ARDFM) is set to allow traditional banks to provide services under the Islamic window format. This is specified in a new draft law on banks and banking activities, which Dauren Salimbayev, director of the Department of Methodology and Prudential Regulation of Financial Organizations at the ARDFM, spoke about during roundtable discussions.
Under the new law, Islamic banking regulation in Kazakhstan will also apply to Islamic windows, which are services based on Islamic principles provided by a conventional bank. In addition, the regulation of banks carrying out Islamic transactions will take into account the requirements for Islamic banks and will be amended with provisions related to the conduct of both Islamic and non-Islamic business, which include:
- Qualification requirements for managerial personnel of the Islamic lines of business;
- Rules for the financial provision of Islamic lines of business, for instance, capitalization increases and profit management;
- Application of current prudential regulations to banks conducting Islamic transactions;
- Maintenance of separate financial records, with the possibility of mutual overhead cost accounting;
- Minimum requirements for information disclosure related to Islamic business activities;
- A partially segregated operating model for the Islamic line of business.
According to ARDFM Chair Madina Abylkassymova, the draft law is scheduled to be submitted to parliament this September, with its adoption anticipated after January 2026.
On June 27, 2024, Deputy Chair of the ARDFM Olzhas Kizatov announced that Kazakhstani banks would be allowed to establish Islamic windows within their branches. He noted that the initiative aims to further promote the development of Islamic finance in Kazakhstan.
