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The National Bank of Kyrgyzstan and Islamic Development Bank are working on creating a bank with Islamic finance principles in Kyrgyzstan, according to the chief of NBKR, Mr Tolkunbek Abdygulov.
Abdygulov said in a statement, that developing Islamic finance principles will allow the citizens to use other types of financing, which will increase the competition between banks and thus improve the quality of bank services and bank products. “After entering into force of a new law on National Bank and banking activities, Civil Code will be complemented by regulations on deals according Islamic principles.”

IFC, a member of the World Bank Group, has released a study that finds overwhelming demand for Islamic finance among smaller business in the Kyrgyz Republic. The report revealed that 80 percent of micro, small, and medium enterprises (MSMEs) are interested in Shariah-compliant financing, a market that could be worth up to $456 million for lenders. Despite that potential, the study "Islamic Banking and Finance: Opportunities across MSMEs in the Kyrgyz Republic" found that Islamic finance was not widely available because of a lack of awareness and the high cost of structuring transactions. Yet Kyrgyz officials are working to overcome these challenges.

The head of National Bank of Kyrgyzstan Tolkunbek Abdygulov and the president of the Islamic Development Bank (IDB) Ahmad Mohamed Ali Al-Madani had discussed the prospects of jointly opening an Islamic bank in Kyrgyzstan.
Additionally, they had talked about the other relevant things such as the perspectives of Kyrgyz Republic economy development, the establishment of a joint Shariyah compliant commercial bank and the possibility of opening an IDB representative office in Kyrgyzstan. The discussion took place during the International Financial conference “Islamic Finance: Meeting Global Aspirations” in Kuwait, on November 11, 2015.

Tolkunbek Abdygulov also had a meeting with Christine Lagarde, the Managing director of the International Monetary Fund, in which they discussed further course of cooperation between Kyrgyzstan and the IMF and drew a plan on joint actions during the financial crisis. Ms Lagarde also noted the concerted actions of Kyrgyztan’s National Bank and the government on monetary and fiscal policies.

Kyrgyzstan hopes to use Islamic finance to attract foreign investment. The Kyrgyz government approved the project on introduction of Sukuk, State Secretary Abduhalik Shamshiyev said at the board meeting of the State Service for Financial Market Regulation and Supervision. International law firm Simmons & Simmons and the Kyrgyz Republic signed an agreement in May 2014 to provide consultancy services for the development of laws and regulations, supporting the introduction of Takaful and Sukuk in the Kyrgyz Republic. The consultancy services were funded under a technical assistance grant provided by the Islamic Development Bank (IDB).

The Islamic Development Bank has presented Kyrgyzstan 5 mobile clinics, the Department of Information Policy of the President reported. Last Wednesday, President Almazbek Atambayev and IDB President Akkhmad Mohamed Ali Al Madani discussed the implementation of new projects in Kyrgyzstan. The IDB Director said that he will send a special mission to explore new joint strategic projects in the near future. Moreover, an agreement on donating Kyrgyzstan five mobile clinics designed to improve access to health services in remote areas of the country was signed during the meeting. Equipment cost is estimated at $10 million.

The Government of Kyrgyzstan and the Islamic Development Bank (IDB) started elaboration of joint projects. The First Vice Prime Minister of the Kyrgyz Republic Taiyrbek Sarpashev held a working meeting on implementation of the agreements, reached at the end of a working visit to Saudi Arabia. He stressed that with the leadership of the IDB signed agreements for projects totaling $46.570 million. For improvement of energy supply of Arkinsky array of Lyailyak district of Batken province $16.25 million will be allocated. For the reconstruction of Osh - Batken - Isfana highway - $21,320 million. For sustainable rural development in the Kyrgyz Republic - $9 million.

International law firm Simmons & Simmons and the Kyrgyz Republic have signed an agreement to provide consultancy services for the development of laws and regulations, supporting the introduction of Takaful and Sukuk in the Kyrgyz Republic. The consultancy services to be provided by Simmons & Simmons are to be funded under a technical assistance grant provided by the Islamic Development Bank (IDB). First Vice Prime Minister of the Kyrgyz Republic, HE Tayirbek Sarpashev, noted that upon the signing of this Agreement, the Government expects the economy to attract large investments that will favourably affect the development of the financial market and banking sector. The Simmons & Simmons team is led by Muneer Khan, assisted by managing associate Tariq Hameed.

In Kyrgyzstan, state-owned companies play a significant role in the economy, especially in the banking, mining, and transportation sectors. Cronyism and corruption within these companies presents a major obstacle to Kyrgyzstan’s market- economic transition. The existing dynamic only reinforces a patronage system—the antithesis to democracy—resulting in poor economic performance and public service delivery. To reduce such overt political influence in corporate management and increase board independence, CIPE and its local partner, the Corporate Governance School (CGS), are educating board members from state-owned enterprises about the principles of corporate governance. During 56 hours of lectures, discussions and case studies, participants learn the fundamentals of corporate governance, including the function and responsibilities of boards of directors.

Islamic Development Bank plans to grant Kyrgyzstan $17.5 million for implementation of the Sustainable Villages Development Programme. The draft agreement between the Islamic Development Bank and the Kyrgyz government was approved by the Committee for Foreign Affairs on April 22. For the first stage of the project there will be allotted $9 millions, $6 millions of which is to be given by IDB; and $3 millions will be allocated for the second stage by the Islamic Solidarity Fund.

The Second Annual Islamic Finance Forum will gather investors, borrowers and regulators in the same place to accomplish a better understanding of existing instruments of Islamic Finance and to find answers to problems encountered frequently in the course of doing business.
The forum delegates is amde of representatives from the Embassies of UAE, Malaysia, Egypt, Saudi Arabia, Turkey, Russia, Kyrgyzstan and other countries.

Mohammad Yahya Maroufi, secretary general of Economic Cooperation Organization (ECO), revealed that his organization has agreed to certify a bank to promote economic cooperation with banks in the Islamic countries.
He added that the plans include to open a trade market for its member states.
The ECO curent members are: Islamic Republic of Iran, Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.

The country’s parliament has approved legislation enabling all commercial banks in Kyrgyzstan to operate according to Shari’ah principles. National Bank of Kyrgyzstan will be responsible for issuing licences to Shari’ah-compliant financial institutions, as well as supervising and regulating their activity.