Open Joint-Stock Company (OJSC) Sohibkorbonk (Tajik joint-stock bank for entrepreneurship support), which is currently converting operations to become full-fledged Islamic bank, has announced vacancy for the post of member of the Islamic Financial Services Committee (IFSC).

In accordance with the organization structure of the future Islamic bank, the IFSC will be one of the key supervisory bodies responsible for ensuring compliance of agreements concluded by the bank with standards of Islamic banking activity.

While fulfilling their duties IFSC member should be guided by international standards and Fiqh (Islamic jurisprudence).  

Meanwhile, the Islamic Financial Services Board (IFSB), an international body that sets standards and offers guidance for Islamic banking and finance regulatory and supervisory agencies, began operations in early 2003.  Based in Kuala Lumpur, Malaysia, the IFSB has 183 members (including full members, associate members, or observer members).  It was founded by “a consortium of central banks” and the Islamic Development Bank.

The International Islamic Financial Market is a part of IFSB that standardizes Islamic capital market products and operations.   

Recall, Sohibkorbonk began converting operations to become a full-fledged Islamic bank in October last year.  Chairman of Sohibkorbonk Board Sherali Zardov and the Islamic Corporation for the Development of the Private Sector (ICD) chief executive Khaled Al-Aboodi signed a memorandum of understanding (MoU) in Dushanbe in early October last year.  

Sohibkorbonk was registered with the National Bank of Tajikistan (NBT) as diversified bank in 1999.  Established on the basis Tojikbankbiznes, Sohibkorbonk, with headquarters in Dushanbe, now has five branches and 42 banking service centers in various regions of the country.    

As it had been reported earlier, Tajik lender Bonki Rushdi Tojikiston (Tajikistan Development Bank) planned to switch to Islamic banking in 2015, after it signed an agreement with ICD to advice on the transition.   However, no specific decisions have been made so far.  

Recall, the law on Islamic banking in Tajikistan came into force on August 5, 2014.

Islamic banking is a banking activity that is consistent with the principles of Sharia and its practical application through the development of Islamic economics.  Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for loans of money.  Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam ("sinful and prohibited").  Although these principles have been applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only in the late 20th century were a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community.

Islamic banking has the same purpose as conventional banking: to make money for the banking institute by lending out capital.  But that is not the sole purpose either.  Adherence to Islamic law and ensuring fair play is also at the core of Islamic banking.  Because Islam forbids simply lending out money at interest, Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent it.  The basic principle of Islamic banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking.

Islamic banks reportedly have more than 300 institutions spread over 51 countries, including the United States through companies such as the Michigan-based University Bank, as well as an additional 250 mutual funds that comply with Islamic principles.