Banking - The Times Of Central Asia

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Islamic finance

Uzbekistan Targets $50 Billion in Investment with Financial Reforms

Uzbekistan is preparing to introduce Islamic finance services nationwide, with the first offerings expected in 2027. Under the country’s updated “Uzbekistan 2030” development strategy, at least three commercial banks are expected to provide Sharia-compliant financial services by the end of the decade, marking a significant shift in the structure of the banking sector. Against this backdrop, President Shavkat Mirziyoyev was briefed on March 25 on a broader set of initiatives aimed at strengthening the country’s investment climate. These include plans to establish the Tashkent International Financial Center, launch an International Center for Digital Technologies, and gradually introduce Islamic finance mechanisms. The presentation comes as Uzbekistan seeks to position itself more competitively in the global economy amid rising geopolitical uncertainty and intensifying competition for foreign investment. Officials said the country’s natural resources, economic potential, and ongoing reforms create favorable conditions for attracting international companies exploring new markets. Mirziyoyev stressed the need to act swiftly to capitalize on emerging opportunities, noting that attracting foreign investors requires modern infrastructure, a transparent business environment, and legal systems aligned with international standards. Uzbekistan aims to attract more than $50 billion in investment this year. A central component of the strategy is the Tashkent International Financial Center, which is expected to serve as a platform for new investment flows and long-term economic growth. By 2030, it is projected to attract an additional $20-25 billion, contribute up to 1% of annual GDP growth, and create as many as 15,000 highly skilled jobs. The center will operate under a special legal regime incorporating elements of the common law system of England and Wales, while allowing its governing bodies to adopt independent regulations. Plans include the establishment of a Tashkent International Commercial Court and an International Arbitration Center to handle disputes. Investors are expected to benefit from tax incentives, simplified visa procedures, and the ability to freely move and repatriate capital, alongside access to modern financial instruments, including digital assets. In parallel, Uzbekistan is developing the International Center for Digital Technologies under the Enterprise Uzbekistan brand. The center will function under a special legal framework expected to remain in place until 2100. Within a regulatory sandbox, companies will be able to test new technologies, pay salaries in foreign currency, and operate under international labor and data standards. The digital center will focus on artificial intelligence, data processing, research and development, and startup support. By 2030, it is expected to attract up to 1,000 companies, create more than 300,000 jobs, and generate export revenues of up to $5 billion. Several major international technology firms have already expressed interest in the initiative. The introduction of Islamic finance is another key pillar of the reform agenda. The proposed system includes instruments such as murabaha, mudarabah, musharakah, and Islamic leasing, all designed to comply with national legislation. Tax measures are also under consideration, including exemptions on certain transactions and investment income. To oversee the sector, an Islamic Finance Council will be established under the Central Bank, with similar bodies to be created within...

Digital Payments

Tokayev Criticizes Banks Over Slow Adoption of Kazakhstan’s Digital Financial Infrastructure

Kazakhstan’s President Kassym-Jomart Tokayev has criticized the country’s banks for their slow adoption of state-developed digital financial infrastructure. He made the remarks during a meeting on the implementation of the Digital Qazaqstan project. During the meeting, the heads of ministries and government agencies presented reports on the rollout of digital solutions in public administration and the economy. In his comments, the president stressed the need for more active deployment of artificial intelligence in industry, as well as progress in developing digital payment infrastructure. According to Tokayev, the National Bank has already created a digital financial ecosystem that includes interbank QR payments and transfers, as well as settlements using the digital tenge. “This significantly reduces costs by shortening the chain of payment intermediaries. The requirement for all banks to connect to this infrastructure is enshrined in law, but the largest banks are delaying compliance,” the president said. Since September 2025, a unified QR code system for interbank payments has been operating in Kazakhstan. The service allows users to pay for goods and services through mobile banking applications. Customers simply scan a QR code at a merchant’s terminal and confirm the transaction. Initially, the service was available to clients of three banks. At present, 15 banks have signed participation agreements, although only six have completed technical integration with the system. The remaining institutions are required to connect by July 18, 2026. Speaking in November 2025, National Bank Chairman Timur Suleimenov said the rollout had been slowed by both technical and market issues, adding that large financial ecosystems were reluctant to share payment traffic. He also described the digital tenge as a tool for transparency and control in public spending rather than a competitor to commercial banks’ own payment products. Tokayev also emphasized that the widespread adoption of artificial intelligence technologies in the real economy is a strategic priority. He linked this goal to the country’s technological sovereignty and called for accelerating the digitalization of the state apparatus. According to the president, more than 90% of public services in Kazakhstan have already been moved online, yet many government information systems remain insufficiently integrated. “Speed and quality must be the priority at every stage. It is data that needs to flow, not people,” Tokayev said. He added that digital transformation is incompatible with outdated bureaucratic practices. “Digitalization and bureaucracy are as incompatible as ice and fire. We cannot force modern technologies to fit into old administrative models,” the president stated. Tokayev also expressed concern about the pace of Kazakhstan’s digital transformation. “I read news about the development of artificial intelligence; it is advancing so rapidly that I am becoming anxious about Kazakhstan’s digital future. It seems to me that the digitalization process is slowing down,” he noted. The Times of Central Asia previously reported that the adoption of artificial intelligence technologies in the financial sector across Central Asia remains uneven, although Kazakhstan is currently regarded as the regional leader.

Banking

Kyrgyzstan Intends to Reduce the Storage Period for Negative Credit Information

Kyrgyz authorities are moving to ease regulations surrounding credit history retention in an effort to stimulate the banking sector and provide indirect support to small and medium-sized enterprises. A draft law from the Ministry of Economy and Commerce has been submitted for public discussion. The proposed changes would reduce the retention period for negative credit information from five years to three, and for positive information from seven years to five. According to estimates by local economists, the credit portfolio of Kyrgyzstan’s commercial banks reached approximately $5.27 billion last year. The share of overdue loans stood at around $151 million, or about 2% of the total. The ministry believes that easing access to credit will help stimulate entrepreneurial activity. Broader borrowing opportunities could support business development, increase employment, and generate additional tax revenue. As of now, approximately 1.5 million Kyrgyz citizens have a credit history, of whom 302,000 have negative records, including nearly 200,000 individuals blacklisted by financial institutions. If the law is enacted, a substantial number of these citizens may regain access to formal banking services. Authorities also expect the reform to reduce reliance on shadow lending and curb dependence on microloans outside the official financial sector. Under the internal policies of most commercial banks, a loan delinquency of more than 90 days typically qualifies as negative credit history, severely diminishing a borrower's chances of securing new financing. The bill has already passed its first reading in parliament. Given that it has been approved by the relevant ministries and agencies, its eventual adoption appears likely.

Banking

Kazakhstan’s Banking System and the Logic of Early Enforcement

Kazakhstan’s growth model depends on uninterrupted access to international finance. Because its largest energy and mining projects rely on foreign capital, hard-currency financing, and offshore banking channels, confidence in the integrity of its banking system is not just a regulatory issue; it is a macroeconomic constraint. This reliance is structural. Export revenues are concentrated in globally-priced commodities—especially oil (up to 60% of total exports in recent years), and uranium (40%+ of global output)—linking fiscal stability directly to hard-currency liquidity and correspondent banking access. In that context, correspondent banking is a systemic requirement underpinning international payments and trade. Because international banks incorporate sanctions exposure and AML/CFT risk into their assessments, adverse risk perceptions can trigger de-risking behavior that raises costs and slows flows. Astana is now courting U.S. and European investment in multibillion-dollar initiatives, including the Trans-Caspian/Middle Corridor and projects related to rare earth and critical minerals supply chains. This further increases Kazakhstan’s exposure to Western compliance standards and regulatory scrutiny. With a growth model heavily driven by foreign capital, Kazakhstan understands that perceived weaknesses in banking system compliance would not halt investment outright, but would translate into higher funding costs and reduced appetite in international capital markets. Sanctions Exposure After 2022: Structural, Not Tactical Russia’s full-scale invasion of Ukraine in February 2022 sharply increased Kazakhstan’s exposure to global sanctions enforcement. Geography, membership in the Eurasian Economic Union, and dense trade and infrastructure ties with Russia made Kazakhstan a focal point for concerns over re-exports and sanctions leakage. At the same time, its border with China—an important source of dual-use goods—has added another layer of scrutiny, even as reporting later showed that China-origin cargo bound for Russia was, in documented cases, routed without physically entering Kazakhstan, despite being linked to it in trade flows. Western sanctions reshaped logistics faster than enforcement capacity could adapt. Restrictions on shipping, insurance, and financial services increased reliance on overland transit routes through Central Asia, drawing attention to Kazakhstan, even where violations were difficult to substantiate. Western investigations later showed that EU-origin dual-use goods continued to reach Russia through intermediary channels, underscoring enforcement gaps beyond Kazakhstan itself. For Kazakhstan, however, heightened scrutiny translated directly into financial risk, regardless of intent. In the logic of global compliance, perception can be as consequential as proof. Early Intervention as Risk Management Since 2022, Kazakhstan’s response has evolved from declaratory neutrality to early, containment-oriented enforcement. This shift has been driven less by foreign-policy alignment than by a calculation that even isolated violations can carry disproportionate financial consequences. President Kassym-Jomart Tokayev has repeatedly emphasized that sanctions violations carry direct economic consequences for Kazakhstan, warning in public remarks that non-compliance could expose the country to secondary sanctions affecting trade, finance, and investment flows. By framing compliance as a matter of macroeconomic risk management rather than geopolitical positioning, the government signaled that enforcement would prioritize financial stability over short-term commercial convenience. That logic has translated into practice. When Western sanctions were imposed on Sberbank in 2022, Kazakhstan approved the sale and restructuring of...

Rogun Hydropower Plant

Tajikistan Approves Use of Central Bank Reserves to Fund Rogun Hydropower Plant

Tajikistan’s lower house of parliament on January 22 approved a draft law allowing funds from the reserve fund of the National Bank of Tajikistan to be used to finance construction of the Rogun Hydropower Plant, a project viewed as central to the country’s long-term energy strategy. The decision was reported by Sadoi Mardum, the official newspaper of the lower chamber. According to the publication, the bill was introduced at the initiative of President Emomali Rahmon. Speaking before lawmakers, Finance Minister Faiziddin Qahhorzoda said the legislation creates a legal mechanism for channeling reserve fund resources through the state budget toward completion of Rogun, which authorities describe as a strategically important facility. Qahhorzoda explained that the law provides for the transfer of 916 million Tajik somoni (approximately $100 million), representing the remaining balance of the National Bank’s reserve fund generated from its financial performance in 2024. He told deputies that the measure is intended to help Tajikistan achieve energy independence by 2027 and reduce reliance on external loans and grants. The minister also pointed to broader budgetary support for the energy sector. Under the state budget for 2026, around 15 billion somoni (more than $1.6 billion) has been allocated for fuel and energy projects, with the majority of those funds earmarked for completion of the Rogun dam. The parliamentary decision follows earlier reports highlighting financial oversight challenges surrounding the hydropower project. As previously reported by The Times of Central Asia, an independent audit of Rogun’s 2024 financial statements identified serious concerns related to financial reporting and internal controls. The audit was conducted by Baker Tilly Tajikistan, a member of the international Baker Tilly network, and resulted in a qualified opinion. Auditors said they were unable to fully confirm the accuracy of the company’s accounts and cited several material issues, including a possible understatement of share capital. They also noted that they did not participate in scheduled inventories of cash, fixed assets, or other holdings as of December 31, 2024, limiting their ability to verify parts of the company’s assets.

Banking

Kyrgyzstan Sets Higher Capital Thresholds for Commercial Banks

The National Bank of the Kyrgyz Republic (NBKR) has approved new minimum capital requirements for commercial banks, including foreign bank branches, which will take effect in January 2026. Under the revised regulations, the minimum authorized capital must reach $34.5 million by 2030. The central bank stated that the increase is intended to foster a more resilient and stable banking sector. To mitigate the impact on existing financial institutions, the capital thresholds will be raised incrementally over the coming years. According to the schedule, commercial banks must raise their authorized capital to: $9 million by July 1, 2026 $11.5 million by July 2026 $17.1 million by July 2027 $23 million by July 1, 2028 $28.6 million by July 1, 2029 $34.5 million by July 2030 Systemically important banks, defined as the largest players in the market, will face stricter standards. These institutions must raise their authorized capital to $91.5 million. If designated as systemically important, a bank will have one year to meet the authorized capital requirement and three months to bring its regulatory capital in line, according to the NBKR. Previously, the minimum authorized capital for commercial banks stood at $9.1 million, and $22.8 million for systemically important institutions. The NBKR said the revised requirements reflect the growth of both the national economy and the banking sector. The banking industry in Kyrgyzstan is expanding rapidly. As of the end of October 2025, the sector's total assets reached $12.8 billion, an increase of 38% since the beginning of the year. Customer deposits climbed to $9.1 billion, marking a 35% rise. The growth is largely attributed to higher interest income from loans. There are currently 21 commercial banks and 306 branches operating across the country.