Problems of Formation and Development of the Islamic Financial and Banking System in Uzbekistan

    On November 7, 2025, at the initiative of the Khorezm Regional Branch of the Center for Sustainable Development, a round table discussion titled "Problems of Formation and Development of the Islamic Financial and Banking System in Uzbekistan" was held at Urgench State University named after Abu Rayhan Beruni, in partnership with the International Islamic Academy of Uzbekistan. Participants included bank employees of the Khorezm region, entrepreneurs, university faculty, master's students, high-achieving undergraduates, and economics specialists.

    The round table was opened by Acting Rector of Urgench State University, Professor S.U. Khojaniazov, and the Deputy Khokim of the Khorezm Region for Youth Policy, Social Development, and Spiritual-Educational Affairs, Professor S.K. Salaev. Speakers included Professor of the International Islamic Academy of Uzbekistan, Doctor of Economic Sciences, Academician of the Academy of Sciences of Uzbekistan N. Tukhliev; Professor of the International Islamic Academy of Uzbekistan, Doctor of Economic Sciences R. Abdullaev; Head of the Sector at the Research Center "Scientific Foundations and Problems of the Development of the Uzbek Economy" under Tashkent State University of Economics S. Abrarov; Director of Islamic Business and Finance, PhD J. Imomnazarov; Head of the Khorezm Regional Branch of the Center for Sustainable Development, Professor B. Ruzmetov; and others.

    The experts who spoke at the event conducted a comprehensive discussion of the theoretical and practical aspects of the Islamic financial system. It was emphasized that the Islamic financial system differs fundamentally from the conventional financial system in several key respects: the principle of interest-free lending, adherence to Sharia norms in financial operations, the principle of risk and profit sharing, and the alignment of investment projects with criteria of environmental and social sustainability. The experts identified the factors driving the development of the Islamic financial system in Uzbekistan and underscored the importance of the regulatory and legal framework, the maturity of financial institutions, international experience, and the adoption of innovative technologies.

    Special attention was paid to a comparative analysis of the common and distinguishing features of conventional and Islamic capital markets. Common features identified included financial instruments, mechanisms for attracting investment, and strategies for ensuring financial stability. The distinguishing features were explained by the functioning of Islamic finance on the basis of Sharia principles, interest-free operations, the principle of equitable distribution of income and risk, and the incorporation of social responsibility.

    Professor B. Ruzmetov, Head of the Khorezm Regional Branch of the Center for Sustainable Development, speaking on the strategic significance of integrating the Islamic financial system and conventional financial mechanisms for the sustainable regional development of Uzbekistan, drew participants' attention to the fact that an integrated approach can enhance the effectiveness of financing regional investment projects, ensure economic stability, and reduce territorial disparities.

    As noted by Professor B. Ruzmetov, in recent years Islamic finance has become one of the most rapidly developing sectors of the global financial system. International reports for 2024–2025 indicate steady growth in the global Islamic finance market, with consistent development across its major segments and financial instruments.

    According to 2024 year-end data, Islamic finance assets have reached USD 4.2–4.5 trillion. This figure is nearly double the 2015 level, with the sector growing at an annual rate of 10–12%. For comparison, the average growth rate in the conventional banking sector stands at 4–5%. In this sense, Islamic finance is emerging as one of the most dynamic and promising directions within current global financial markets.

    At the same time, the Professor emphasized the importance of avoiding haste in developing the sector, the necessity of thoroughly studying existing international experience, and the need to ensure harmonization between Sharia requirements and national legislation. Of particular strategic importance is the training of qualified personnel for the sector who possess combined knowledge of both Sharia and finance.

    As Professor Ruzmetov noted, the compatibility of the Islamic economic model with the concept of sustainable development is also of special significance. The three core principles of sustainable development—economic benefit, social justice, and environmental responsibility—are fully consistent with the norms of Islamic finance. Therefore, the development of Islamic finance not only diversifies the financial system but also serves to strengthen justice, inclusivity, and environmental responsibility within society.

    During the event, participants were presented with practical examples, including the application of Islamic financial instruments in agricultural and small business development, the financing of public-private partnership projects, and approaches to attracting investments aligned with environmental and social standards.

    The conference was organized in a debate format, during which participants received comprehensive answers to their questions of interest.

    Round table discussions of this kind serve to deepen the study and expand the potential applications of the Islamic financial system in Uzbekistan, introduce equitable, secure, and sustainable financial mechanisms into the economy, improve the investment climate, advance environmentally and socially responsible financial practices, support personnel training, and enrich scholarly discourse.

    Professor B. Ruzmetov Head of the Khorezm Regional Branch, Center for Sustainable Development