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Bank TuranAlem, Emirates Islamic Bank: Joint venture raises prospect of Shariah-compliant banking in Kazakhstan

Is central Asia of the verge of an Islamic banking boom?

In the view of Khojanazarov Aidarbek, the head of a new Islamic finance project at Kazakhstan’s Bank TuranAlem, the government of Kazakhstan is now "very committed to Islamic banking. I have been told by the president’s party that they will support it as much as they can."

For Bank TuranAlem’s sake, the president’s party had better keep to their word. The Kazakh cabinet, possibly the president, and then (they hope) the parliament, will soon be presented with regulatory and tax proposals from lawyers hired by Bank TuranAlem, and their new joint venture partner, Emirates Islamic Bank, a Dubai financial institution. By the end of September, says Aidarbek, Bank TuranAlem expects the law to have been changed to allow for profitable Islamic banking in Kazakhstan, a country whose population is roughly 50% Muslim.

Bank TuranAlem has so far issued four Islamic financing facilities. Most recently, in July, it issued a $250 million Islamic syndicated loan. But it was at an Islamic Finance Conference held in Kazakhstan’s capital Almaty in May that the bank first announced that it had signed a memorandum of understanding with Emirates Islamic Bank for the creation of a joint Islamic banking venture in Kazakhstan.

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