Commentary on the Regulation "On the Procedure for Providing Services Related to Islamic Financing by Microfinance Organizations"

The decision of the Central Bank Board "On Approval of the Regulation on the Procedure for Providing Services Related to Islamic Financing by Microfinance Organizations" was state registered by the Ministry of Justice on July 26, 2024 under number 3536.

This Regulation was developed based on the standards on Islamic financing of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as well as taking into account advanced foreign experience and national context, and establishes the procedure for providing services related to Islamic financing by microfinance organizations.

The Regulation established general requirements that must be complied with by microfinance organizations when providing services related to Islamic financing.

In particular, it was specified that microfinance organizations must establish a special council within themselves to coordinate Islamic finance issues or may involve its activities on an outsourcing basis to provide services related to Islamic financing.

At the same time, it was noted that if microfinance organizations provide other traditional services along with services related to Islamic financing in accordance with legislation, the accounting for the activities of this microfinance organization related to providing services related to Islamic financing must be kept separately.

In addition, this Regulation established requirements applicable to the special council and its members, as well as services related to Islamic financing such as Islamic leasing, financing based on profit sharing (mudaraba), financing based on credit trade (murabaha), partnership – financing based on sharing of profits and losses (musharaka), financing based on advance payment (salam), and requirements for providing these services.

You can familiarize yourself with the document in detail via this link.