The new Banking Law is designed to create conditions for development of the Islamic finance.

Madina Abylkassymova, Chairperson of the Agency for Regulation and Development of the Financial Market, made this statement at a presentation to the Majilis of Parliament of the draft laws ‘Banks and Banking Activities in the Republic of Kazakhstan’ and ‘Changes and Amendments to Certain Legislative Acts of the Republic of Kazakhstan on the Regulation and Development of the Financial Market.’ The draft laws were developed for the purpose to implement the 2024 and 2025 Addresses of the Head of State.

Currently, Islamic banking in Kazakhstan is permitted only through establishment of a separate Islamic bank. Currently, two Islamic banks operate in Kazakhstan. these are foreign bank Abu Dhabi Commercial Bank and Kazakhstan-based bank Zaman Bank. Their aggregate assets and loan portfolio account for less than 0.5% of the banking system.

"The Draft Law provides for an opportunity to grant universal banks a right to conduct Islamic banking operations through 'Islamic windows' within their existing license. For this purpose, it is offered to use the 'Islamic window' model, which is broadly used in the UAE, Malaysia, Pakistan, Bahrain, Qatar, and Indonesia," said Madina Abylkasymova.

It should be noted that the 'Islamic window' model allows banks to create specialized subdivisions within their structure offering the Islamic products without the need to establish a separate bank.

"Given specifics of the Islamic finance, the draft law provides for organizational separation of the Islamic activities, separate accounting and management of assets and liabilities, allocation of dedicated personnel, and mandatory presence of a Shariah compliance council that approves financial products and conducts audits," the Agency Head added.

The new banking law takes into account technological changes, growing role of the banking sector in economic financing, increased competition, and involvement of new market participants, as well as issues of promoting the fintech and liberalizing the circulation of digital assets.

Source : https://www.gov.kz/memleket/entities/ardfm/press/news/details/1069543?lang=kk