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47HISTORICAL SCIENCES / <<€©ILLœUQUM~J©UrMaL>>#2qî7&),2©2©
Rakhmonov Bahodir Bakhtiyor ugli Researcher of International Islamic Academy of Uzbekistan DOI: 10.24411/2520-6990-2020-12152 THE ISLAMIC DEVELOPMENT BANK AND ITS ACTIVITY IN UZBEKISTAN
Abstract
The article considers the features ofthe Islamic Banking System, Islamic Development Bank and briefly revels the activity of the bank in the Republic of Uzbekistan.
Keywords
Islamic banking, the Islamic Development Bank (IsDB), riba, non-interest banking system.
Islamic banking, also known as non-interest banking, is a banking system that is based on the principles of Islamic or Sharia law and guided by Islamic economics1 . The principles which emphasize moral and ethical values in all dealings have wide universal appeal. Sharia prohibits the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as carrying out trade and other activities that provide goods or services considered contrary to its principles2. For this reason, Islamic law prohibits collecting interest or "riba."
The origin of Islamic banking dates back to the beginning of Islam in the seventh century and in the Middle Ages, trade and business activity in the Muslim world relied on Islamic banking principles. These banking principles spread throughout Spain, the Mediterranean, and the Baltic states, arguably providing some of the basis for western banking principles. From the 1960s to the 1970s, Islamic banking resurfaced in the modern world3.
These are the principles of Islamic banking:
• Paying or charging interest. All forms of interest are riba and hence prohibited4. Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent use of interest;
• Investing in businesses involved in activities that are forbidden (haraam). These include things such as selling alcohol or pork, gossip media5;
• Charging extra for late payment. This applies to murabahah or other fixed payment financing transactions;
• Maisir. This is usually translated as "gambling" but used to mean "speculation" in Islamic finance6. Involvement in contracts where the ownership of a good depends on the occurrence of a predetermined, uncertain event in the future is maisir and forbidden in Islamic finance;
• Gharar. Gharar is usually translated as "uncertainty" or "ambiguity". Bans on both maisir and gha-rar tend to rule out derivatives, options and futures;
• Engaging in transactions lacking "material finality". All transactions must be directly linked to a real underlying economic transaction, which excludes options and most other derivatives7.
Of the major Islamic banking system representatives is the Islamic Development Bank (IsDB). The Islamic Development Bank is a multilateral development bank (MDB), working to improve the lives of those we serve by promoting social and economic development in Member countries and Muslim communities worldwide, delivering impact at scale. They provide the infrastructure to enable people to lead better lives and achieve their full potential8. The bank works for empowering people for a sustainable future, driving innovation, partnerships, Islamic Finance and value chains. The Mission of the IsDB are:
• Spread the belief that all people have the right to live in dignity and prosperity, and that nurturing economic growth is the best route out of poverty.
• Equip people to drive their own economic and social progress at scale, putting the infrastructure in place to enable them to fulfil their potential.
• Build collaborative partnerships between communities and nations, across the public and private sectors.
• Foster innovative and sustainable solutions to the world's greatest development challenges, and work towards the UN Sustainable Development Goals.
Uzbekistan joined the IsDB in 2003 and its share in subscribed capital is ID 13.4 million (0.03% of IsDB total subscribed capital). However, the first experience of cooperation began in 1992 with the allocation of grant funds to the Spiritual Administration of Muslims of Uzbekistan in the total amount of $ 1.4 million9. For
1 https://www.investopedia.eom/terms/i/islamicbanking.asp
2 https://www.islamie-banking.com/explore/islamie-fi-nanee/islamie-banking#What%20is%20Islamie%20Bank-ing?
3 https://www.investopedia.eom/terms/i/islamiebanking.asp/ History of Islamie Banking
4 Khan, What Is Wrong with Islamie Eeonomies?, 2013: p.xv-xvi
5 El-Hawary, Dahlia; Grais, Wafik; Iqbal., Zamir
(2004). Regulating Islamie finaneial institutions: The nature
of the regulated. World Bank policy research working paper 3227. Washington, DC: World Bank. p. 5.
6 F, J (8 October 2014). "Why Islamic financial products are catching on outside the Muslim world". The Economist. Retrieved 6 August 2016.
7 Khan, Islamic Banking in Pakistan, 2015: p.89
8 https://www.isdb.org/who-we-are
9 https://nuz.uz/ekonomika-i-finansy/35679-islamskiy-bank-razvitiya-aktiviziruet-svoyu-deyatelnost-v-uzbekistane. html
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today, the parties have overall 86 projects, 42 completed and 44 in process. Total funding of the projects comprises 2 billion US dollars10.
Within the framework of the visit of the President of the Islamic Development Bank Group to Uzbekistan from September 17 to 20 2018, in Tashkent was organized the conference "IsDB Group Day" and round table with the participation of the Arab funds of the Coordination Group. During this visit were discussed a new IDB Partnership Strategy for the Republic of Uzbekistan for 2019-2021 and the 4-year indicative Cooperation Program. A key area of IsDB's activity in Uzbekistan covers such areas as the modernization of road transport, energy and utilities infrastructure, rural housing, the development of drinking water supply, healthcare and education, support for business entities and others. Moreover, particular attention is paid to the implementation of the most important programs and projects aimed at improving the quality of life of the population in rural areas, upgrading infrastructure, equipping medical and educational institutions in the regions with modern equipment, supporting business initiatives of entrepreneurs and unlocking their export potential, including using the state private partnership11.
Furthermore, IsDB is supporting the development of innovational activity in Uzbekistan, For instance, recently, IsDB has awarded four exciting innovators $3,000 each, as part of its fourth edition of the Transformers Roadshow competition in which applicants are invited to pitch ideas accelerating one or more of the UN Sustainable Development Goals (SDGs)12.
To sum up, it could be said that, the introduction of Islamic banking, that is widely used in many countries today, will help to attract additional resources from the population in Uzbekistan and create more opportunities for the development and modernization of national economy.
List of used literature
1. El-Hawary, Dahlia; Grais, Wafik; Iqbal., Zamir (2004). Regulating Islamic financial institutions: The nature of the regulated. World Bank policy research working paper 3227. Washington, DC: World Bank. p. 5.
2. F, J (8 October 2014). "Why Islamic financial products are catching on outside the Muslim world". The Economist. Retrieved 6 August 2016.
3. Khan, Islamic Banking in Pakistan, 2015: p.89
4. Khan, What Is Wrong with Islamic Economics?, 2013: p.xv-xvi
5. Sixth Islamic Conference of Ministers of Higher Education and Scientific research. - Khartoum: The Role of Higher Education in the Development of Science and Technology for a Prosperous Future, 2012. -120 p.
6. Cultural Roles of Civil Society in the Promotion of Dialogue and Peace. - Rabat: Islamic Educational, Scientific and Cultural Organization (ICESCO), 2012. 47 p.
7. Guite to Quality and Accreditation for the Uni-ver sities of the Islamic World. - Rabat: Islamic Educational, Scientific and Cultural Organization (ICESCO), 2007. 90 p.
8. https://www.isdb.org/who-we-are
10 https://www.isdb.org/uzbekistan
11 https://mfa.uz/ru/press/news/2018/09/16121/
12 https://www.isdb.org/news/the-islamic-development-bank-announces-winners-of-the-4th-transformers-roadshow-
in-tashkent-uzbekistan
