The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 14KazakhstanAmbitions for Setting up a Regional Hub for Islamic Finance in CIS

Yerlan Alimzhanuly Baidaulet

Member of Executive Directors Board, Islamic Development Bank Group

The first law on Islamic finance was adopted by the parliament of Kazakhstan and signed by the president on February 12, 2009. It had been drafted in 2008 after serious problems with the liquidity of the banking system as a result of the global economic crisis and after a study had been made of the international good experiences of Islamic banks.

This law was amended in 2011 with clauses on Islamic securities so that all local resident companies monitored by the central bank could originate such capital market transactions.

However, this legal infrastructure is still not sufficient to implement any Shari'ah-compliant business locally, because of its structural weaknesses and noninclusive nature—especially the absence of an entire taxation consideration and by the widespread riba-based mentality of the regulatory bodies and the banking community. The current sectoral legislation appears to be general and nonsystemic, with case-by-case amendments and changes. In October 2012 the third draft law was submitted for the parliament's consideration.

However, as a result of the disputes due to the combination of Islamic finance (takaful) and general accidental insurance into one law, it was withdrawn in June 2013 by the administering agency, the National Bank, back for renewed processing. The critical draft ...