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History

The History of Creation of the Islamic Window in "Uzbek Leasing International A.O." JSC                                                                                                          

Introduction

"Uzbek Leasing International A.O." JSC, the leasing company, striving for innovation and compliance with modern international standards, has been actively cooperating with the Islamic Corporation for the Development of the Private Sector (ICD) since 2007. Over more than 15 years of cooperation, ICD has provided the Company with credit lines totaling 28 million USD, contributing to its growth. In May 2022, a new important chapter began: the Supervisory Board of "Uzbek Leasing International A.O." JSC approved the concept of "Islamic Window", which involves the introduction of Islamic financial products Ijara and Murabaha into the leasing activities of the Company.

The Islamic Window: the Сoncept and the Beginning

Ijara and Murabaha are two key Islamic financial instruments. Ijara is the analogue of traditional leasing, in which the client receives the right to use the equipment for a pre-agreed period and conditions, followed by the transfer of ownership at the end of the term. Murabaha, in turn, is the Purchase and Sale Agreement with the installment payment, in which the final price of the equipment is fixed, including a pre-agreed profit.

The concept of the "Islamic Window" was developed in order to provide Uzbek Leasing International A.O. customers with the opportunity to use these products that comply with the principles of Islamic finance. The implementation of this concept has become possible thanks to cooperation with a number of reputable partners.

Partners and Implementation Plan

In October 2022, the Technical Support Agreement was signed between “Uzbek Leasing International A.O.” and ICD, and the Roadmap for the implementation of the Islamic Window was defined. The ICD was the main partner in this process.

In November 2022, trainings for “Uzbek Leasing International A.O.” employees on Islamic finance began, and in December 2022, the Company was audited for further proposals on the creation of Islamic Window.

Development and Implementation

From January to March 2023, key reports and recommendations were prepared, which became the Report on the current situation of the Сompany and product recommendations;

  • HR recommendations and development of employee job descriptions;
  • Marketing and Communications Report;
  • Accounting Кeport;
  • IT System Report;
  • Risk Management Report;
  • Sharia Governance Report.

The important stage of the process was the identification of the Sharia Advisor. Moreover, after reviewing all candidates in April-May 2023, Mufti Muhammad Ibrahim Issa, the certified Sharia Advisor and Auditor (CSAA), became the Company's choice. His appointment ensured that the new products conformed to the principles of Islamic finance.

In September 2023, the Company's Supervisory Board and Sharia Advisor approved internal policies and regulations, which completed the main stage of the development of the Islamic Window.

The Marketing Department has played a key role in the successful implementation of the Islamic Window concept. As part of the Agreement for Consulting Services concluded on October 12, 2022, the ICD, which is part of the Islamic Development Bank (IsDB) group, was working on the implementation of the Islamic Window. The roadmap of the project includes the important area of Marketing and Communications, within which the Company's Marketing Department actively worked on promoting Islamic financial products, creating a logo and slogan for the Islamic Window.

In 2024, the series of Interviews on Islamic finance and Islamic products in the format of questions and answers (17 short video reels) in Uzbek with titles in Russian and English was implemented jointly with Islamic Business and Finance LLC. These videos were launched for paid promotion through the Company's social media.

The Marketing Department has also developed and implemented new functionality on the Company's corporate website, including support for videos and the creation of a separate section on Islamic finance, which includes subsections: Ijara and Murabaha Conditions, Sharia Committee/Advisor, Fatwas, Partners and Frequently Asked Questions (FAQ). The Marketing Department also plans to create booklets and brochures describing the conditions of Islamic products, branded products and, if necessary, the separate animated training video on Islamic finance.

Educational Initiatives

Currently, the educational initiatives in the field of Islamic finance are actively developing. Training seminars are organized aimed at improving the skills of representatives of leasing companies, commercial banks, insurance companies and other financial institutions. These events are aimed at deepening knowledge and understanding of Islamic financial principles, their competent application in practice and implementation in financial services. For example, in 2022, the “Islamic Business and Finance” LLC, together with the Leasing Association of Uzbekistan, organized the training seminar on the topic: "Basic products used in the modern Islamic banking and financial system" in Jeddah, Kingdom of Saudi Arabia. Due to the increased interest in the event, it was re-held in 2023 in Jeddah, as well as in Kuala Lumpur, Malaysia.

May 11-13, 2023: the "IsDB- FCH Group Private Sector Forum 2023" was held in Jeddah, Kingdom of Saudi Arabia, where employees of “Uzbek Leasing International A.O.” JSC participated in the training on Islamic finance within the framework of this forum.

November 13-20, 2023: The Leasing Association of Uzbekistan jointly with Islamic Business and Finance LLC organized the training seminar on the topic: "Practical aspects of the main Islamic financial products used in the modern Islamic banking and financial system." in Kuala Lumpur and Langkawi Island (Malaysia).

September 19, 2023: A round table was organized by the Leasing Association of Uzbekistan and the Association of Women and Girls of Uzbekistan, where issues on the topic were discussed: "Leasing and Islamic financing in the interests of women's entrepreneurship."

April 30, 2024: The training on the topic: "Comprehensive review of the principles, products and practices of Islamic finance" was held in the building of the Central Bank of the Republic of Uzbekistan in Tashkent. The event was organized by the European Bank for Reconstruction and Development (EBRD) together with the Central Bank of the Republic of Uzbekistan, with the participation of experts from the “KPMG” international audit and consulting corporation. Employees of the "Uzbek Leasing International A.O." JSC also took part in this training.

Results and Achievements

In the process of creating the Islamic Window, many tasks were completed, including the development of Islamic products, the involvement of a Sharia Advisor, the opening of a separate bank account, the creation of a new department, the development of a slogan, logo and section on the corporate website. Moreover, the Company's Project Finance Department (PFD) has financed about 20 projects in a joint project with ICD, including Murabaha and Ijara products. Among these projects there are “ZAR QAND SHIRINLIKLARI” LLC, “ELECTRO MEDIA TRADE” LLC, “BXM GROUP WAREHOUSE” LLC and many others. The creation of the Islamic Window represented the important stage in the development of “Uzbek Leasing International A.O.” JSC, reflecting our Company's desire to introduce Islamic financial instruments into leasing practice. The introduction of Islamic products has allowed the Company to offer customers more diverse and modern solutions that meet the requirements of the modern market. This step not only significantly expanded the Company's capabilities in providing financial services, but also strengthened its reputation as a leading innovator in the field of leasing.