Loans based on Islamic principles — with the consent of the family. The National Bank has proposed amendments

The National Bank of Kyrgyzstan has decided to update its Islamic financing rules. It has prepared a draft resolution, and one of the new provisions is that borrowers will now need written consent from their spouse to obtain financing in excess of 300,000 KGS. The document has been submitted for public discussion.

Moreover, the requirement will also apply if the client already has existing loans. In effect, the regulator is making family status part of the credit risk management system.

Islamic finance is traditionally based on the principles of fairness, transparency, and risk sharing. Now another principle is being added to these: family responsibility.

Spousal consent becomes a prerequisite for financing of 300,000 KGS or more. This means that banks must now consider not only the customer's solvency, but also the potential risks to their entire family. In other words, household debt is no longer considered solely a personal matter for the borrower.

Against this backdrop, the National Bank is simultaneously prepared to provide more flexibility for small businesses. Thus, the regulator proposes to raise the threshold for mandatory confirmation of the targeted use of funds to 300,000 KGS, and for non-cash transfers to suppliers — to 500,000 KGS.