COMPLIANCE OF ISLAMIC BANKING LAW WITH SHARIAH REQUIREMENTS: CASE OF TAJIKISTAN

Abstract

The Islamic banking sector in countries which has introduced Islamic Banking, showing greater resilience during recent two global financial crises than conventional banking sector, remains notably stable with less financial impact on it financial operation and nonperformance financing obligation. It is worth to mention the National Bank of Tajikistan, the regulator body of the country, has intention to change the existing laws related to Islamic financing sector as well as the regulations which has been introduced by it. This study aims to help the regulatory in assessing Tajikistan’s Islamic banking law and its operating legal framework for compliance with Shariah principles, particularly Shariah standards outlined by the Accounting and Auditing Organisation for Islamic Financial Institutions. Our research is limited to analyzing the law related to Islamic Banks and National bank regulations however it will not be including other laws such taxation law, custom law, land & property law where it is requiring to a comprehensive research of those law. The results indicate that aligning financing laws with the Shariah principles contributes to a robust financial sector and will be creating a more attractive investment environment for inviting investors from Islamic countries, particularly Persian Gulf countries. However, given the nascent stage of Islamic banking in Tajikistan, it is imperative for the national government and banking regulator to foster a competitive financial landscape in collaboration with neighbouring states. This involves creating a level playing field to attract investors and promote sector development within the Islamic banking framework where the result will be the country with the best investment climate among all Muslims countries, particularly among other central Asian countries, for Islamic financing and inflow of capital to the economy of the country.