Qatar Islamic Bank, the Arabian Gulf country’s biggest Shariah-compliant lender, plans to start an Islamic bank in Kazakhstan with the former Soviet republic’s government to tap its oil-fueled economic growth.
The plan is in its “very initial stages” and the venture may have start-up capital of $100mn, Ahmad Meshari Muhaidi, QIB assistant general manager and head of corporate banking, said on May 18,2008 in an interview at the World Economic Forum meetings in Sharm El-Sheikh, Egypt.
Kazakhstan’s $100bn economy has grown an average of 10% a year since 2000 as oil prices surged, triggering a construction boom and fuelling demand for goods and services. The economy will probably average growth of 6% annually through 2011, Finance Minister Bolat Zhamishev said.
Demand for banking services and investments that comply with Shariah’s ban on interest has increased as oil money floods into the Arabian Gulf. The global Islamic finance industry’s assets under management are expanding by 15% a year and may have topped $1tn, according to the Malaysia-based Islamic Financial Services Board. QIB on April 20 said first-quarter profit surged 69% to $125mn after it started an Islamic private equity fund and won a UK investment banking license for its European Finance House unit.
BTA Bank, Kazakhstan’s second-biggest bank by assets, last month said it may open an Islamic unit together with Dubai-based Emirates Islamic Bank as it seeks to attract new customers from among the country’s 7mn Muslims. It may sell as much as $150mn of Islamic bonds, chief executive officer Roman Solodchenko said.
Source: IslamicFinanceArabia.com May 19, 2008
Le Journal RIBH 
Islamic banking is interest free. it share all risks with businessmen. so it’s very necessary for business people. I’m happy to learn that Islamic banking boost in Kazakhstan.
Kazakhstan expects three or four Islamic banks to set up operations in the former Soviet republic this year, central bank head Grigory Marchenko said on Friday.
The mainly Muslim nation passed legislation in February allowing Islamic banking — which operates under the principles of Islamic law.
« All the necessary documents have been adopted by the FSA (Kazakh financial supervisory authority) in Kazakhstan and on the side of accounting, all the documents have been adopted by the central bank, » Marchenko said.
« Overall we are expecting that maybe three or four Islamic banking licences will be extended in the next 12 months, » he told a foreign investment forum attended by EBRD President Thomas Mirow.
Kazakhstan expects three or four Islamic banks to start operating in the country this year, the chairman of the National Bank of Kazakhstan Grigoriy Marchenko said at a foreign investment forum last week.
Qatar Islamic Bank QISB.QA and Bahrain-based Islamic lender Ithmaar Bank ITHMR.BH have already expressed interest in entering the Kazakh market, citing social stability, skilled workforce and a good economic fundamentals.
Kazakhstan where the majority of population are Muslim passed legislation in February allowing Islamic banking.
“All the necessary documents have been adopted by the FSA [Kazakh financial supervisory authority] in Kazakhstan and on the side of accounting, all the documents have been adopted by the central bank,” Marchenko said at a meeting of the Foreign Investors’ Council in Kostanai last week. “Overall we are expecting that maybe three or four Islamic banking licenses will be extended in the next 12 months.”
Al Hilal Bank, the second largest Islamic bank in the United Arab Emirates, already announced plans to move into the Kazakh market and open offices in Almaty and Astana by the end of the year. Fattah Finance, a local player, began its operations in March, immediately after Kazakhstan’s law on Islamic finance came into force. The firms currently offers only brokerage services, but plans to expand its range of activities later this year as it grows its team.
Qatar Islamic Bank and Bahrain-based Islamic lender Ithmaar Bank have also reportedly expressed interest in entering the Kazakh market, citing social stability, skilled work force and a good economic fundamentals. BTA Bank, Kazakhstan’s largest bank, also announced plans to open an Islamic finance subsidiary although the plans are likely to be put on hold, as the bank currently undergoes restructuring of its foreign debt.
Marchenko said traditional and Islamic banking would be separated by law.
« An existing Kazakh bank can establish an Islamic subsidiary. But the law does not anticipate operation through a separate part in an existing non-Islamic bank. … Traditional banking and Islamic banking should be kept separate, » he said.
Kazakhstan’s banking sector, which borrowed extensively abroad to finance growth, has been hit hard by the global credit crunch, and market players have been looking for ways to diversify investment and lending in the industry.
Source: Reuters & Silk Road Intelligencer
It’s really heartening to see that people and governments (particularly Muslims) acrosss the world are taking huge interest in the Islamic banking that encourages interest-free market economy. I sincerely believe that this system of banking can & will definitely save many from the ruthless clutches of the prevalent banking system around the world irrespective of faith & society.