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Kazakhstan is considering the introduction of an interest-free mortgage program, structured according to Islamic principles. This initiative aims to cater to a segment of the population seeking financial solutions that align with their religious beliefs.

Growing Demand for Sharia-Compliant Finance

Rustam Karagoyshin, Chairman of the Management Board at Baiterek National Managing Holding, announced that the feasibility of launching such a program is currently under review. He highlighted that there is a noticeable demand from citizens for financial products that adhere to Sharia law, which prohibits the charging of interest.

The program is being explored in collaboration with international institutions. "Our organization, Otbasy Bank, is the primary entity working directly with the public. It is known that a certain part of the population adheres to religious principles, and therefore, such requests are being received," Karagoyshin stated. He added that while specific timelines are not yet established, Memorandums of Understanding have been signed with several international bodies to facilitate this research.

Understanding Islamic Mortgages

Islamic mortgages, also known as Murabaha or Ijara financing, offer an alternative to conventional interest-based loans. Instead of charging interest, financial institutions typically purchase the property and then sell it to the client at a marked-up price, allowing for installment payments. Another model involves the bank co-owning the property with the client, gradually transferring its share over time. Key principles include the absence of interest, transparency in contract terms, and the sharing of risks between parties.

Current Development Stage

Karagoyshin emphasized that the implementation of Islamic mortgages is still in the research phase. "We are currently studying how Otbasy Bank can offer such a solution to our citizens. This is still being worked out," he explained.

He further elaborated that the existing savings-based model of Otbasy Bank, which is similar to the German Bauspar system, differs from the structure required for Islamic finance. "We cannot say that we will launch this service, because the main system of Otbasy Bank, apart from state programs, is a savings system. Islamic mortgage differs slightly from the savings system. Our savings system is similar to the German model. Therefore, we will first study and then make a decision," Karagoyshin concluded.

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