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National Bank and IDB looking for investor to open Islamic bank

The National Bank of Kyrgyzstan in partnership with the Islamic Development Bank (IDB) offers interested parties to participate in the opening of a new Islamic bank in the Kyrgyz Republic. The official website of the Agency for Promotion and Protection of Investments says.

It is noted that one of the IDB’s strategic goals is to promote and develop the Islamic finance industry around the world, including through participation in the creation of Islamic financial institutions. In order to open such an institution in Kyrgyzstan, the IDB together with the National Bank carried out a market research. It showed that there was a significant demand for Islamic financial services. A business plan for opening of an Islamic bank is also ready.

«Islamic financial services are new directions in the region, but they have a great potential with growing demand both inside the republic and in the neighboring countries. The National Bank adopted a number of changes to the regulatory legal acts to provide equal opportunities to Islamic banks along with traditional banks,» the report said.

The IDB and the National Bank are looking for technical partners now who could act as one of the investors in the project and provide management and technical experience. It is expected that the technical partner will develop policies, procedures and IT systems for the effective functioning of the bank. The technical partner will also take place in the board of directors of the new bank.

It is assumed that the capital of the Islamic bank will be $ 25 million. This financial institution will be one of the largest banks in the country.

The expected internal rate of return will be 22-38 percent depending on the size of the capital. It is planned that the National Bank and IDB will act as shareholders without active participation in the day-to-day management of the bank.