Since the global financial crisis, Islamic banking has garnered increasing interest across Central Asia as an ethical alternative to conventional banking. In Uzbekistan, the government of late President Islam Karimov resisted the groundswell of popular support for reforming the country’s notoriously opaque banking sector. However, since Karimov’s death in 2016, the administration of Shavkat Mirziyoyev has introduced a series of financial reforms that include plans to create a new banking infrastructure based on Islamic principles.

Uzbek banks traditionally domineered by Karimov-era elites are increasingly turning to funding micro, small and medium-sized enterprises (MSMEs) through the help of Islamic finance. Nevertheless, it remains to be seen whether Islamic finance activities in Uzbekistan will challenge, or be co-opted, by elite interests.


  • Despite ongoing reforms ostensibly aimed at increasing competition in the banking sector, state-owned banks account for more than 75% of total sector loans (see “Banking in Uzbekistan – Overcoming Systemic Weaknesses”, 14.08.2017). It remains to be seen whether the government’s latest policy of promoting Islamic finance will weaken the state’s monopoly on the sector.
  • During the presidency of Islam Karimov, the growth of MSMEs was stifled by the government’s prioritisation of enterprises connected to or controlled by the state. The development of Islamic banking in the country may prove to be the catalyst for MSMEs gaining a greater share in domestic markets.
  • The promotion of Islamic banking aligns Uzbekistan with the Middle East and Southeast Asia, which contain the world’s most well-established Islamic finance infrastructures. Collaboration on Islamic banking has the potential to generate other forms of cooperation between the regions.