Kazakhstan Wants Sharia Councils to Develop Islamic Finance
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Kazakhstan’s Agency for Regulation and Development of the Financial Market is proposing the creation of Sharia councils to develop Islamic financial instruments, including sukuk issuance, Orda.kz reports.
The regulator has published a consultative draft law on the capital market. One section of the document is devoted to Islamic financial instruments. The agency says Kazakhstan has geoeconomic conditions favorable for developing Islamic finance.
The proposals concern the issuance of Islamic securities, the work of specialized financing structures, and mechanisms that confirm whether financial instruments comply with the principles of Islamic finance.
The agency proposes developing legal norms for sukuk issuance, the creation of Sharia councils, the activities of special financial companies, and transaction support in line with Sharia requirements.
Sukuk are often described as the Islamic equivalent of bonds. But unlike conventional bonds, where the investor receives interest on debt, sukuk must be linked to an asset, project or cash flow.
According to the regulator, the development of Islamic finance could help attract capital from international Islamic financial centers and create new instruments for both institutional and retail investors.
Malaysia is cited in the document as an example. There, Islamic financial instruments were incorporated into the main capital market law. Key elements included the legal status of Sharia councils, a clear structure for special financial companies, and tax neutrality for sukuk.
Original author: Alexander Zhdanov
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