ASTANA – Kazakhstan’s previously commercial Zaman-Bank became an official Islamic bank Aug. 17 after receiving a license from the National Bank of Kazakhstan. The license allows the bank to tap into the Islamic banking sector and makes Zaman-Bank the second Islamic bank in the country.
Established in 1991, Zaman-Bank announced plans to convert to an Islamic bank in 2014, but was delayed as a result of a lack of regulations concerning the conversion process.
Converting is complicated because banks must conform to Islamic law principles and the country’s National Bank regulations.
But with an Islamic banking accounting for less than one percent of the country’s total banking sector assets, the segment offers a wide range of opportunities.
Al Hilal Bank, operating since 2010 based on intergovernmental agreements between Kazakhstan and the United Arab Emirates (UAE), had been the country’s only Islamic bank so far.
“The bank converted to an Islamic bank, because this sector is still open in Kazakhstan, especially consumer banking,” said Head of Zaman-Bank Islamic Finance Development Unit Timur Rustemov in an interview for this story.
May 2013 marked a milestone event in the history of the bank, he said, as Zaman-Bank signed a strategic partnership agreement with the Islamic Corporation for the Development of the Private Sector (ICD), a multilateral organisation and a member of the Islamic Development Bank (IDB) Group.
Subsequently, ICD acquired a mandate to transform Zaman-Bank into an Islamic bank with expected investment of up to 35 percent of the bank’s subscribed and paid-up capital, noted the bank representative.
Zaman-Bank is planning to focus on retail banking and small and medium enterprises (SMEs), which are crucial for such an emerging economy as Kazakhstan. The bank already offers a range of deposit options, including wakala and mudaraba.
“With the second Islamic bank entering the sector, we hope eventually to offer Islamic auto finance, Islamic mortgage and a range of products and services for SMEs,” noted Rustemov.