Uzbekistan plans to introduce a banking ombudsman role, announced Abrorhuja Turdialiev, Deputy governor of the Central Bank at a meeting of the Legislative Chamber Wednesday.

This initiative was announced during a discussion of the Bill on Islamic finance. The UzLiDeP Party MP Dilmurod Ortikov made several comments regarding the legal codification of standards and the duties of the Islamic Finance Council under the Central Bank.

"The main feature of Islamic finance is that everything hinges on Islamic financial standards. This is very important," Ortikov noted.

According to him, the bill stipulates that the standards will be approved by the Central Bank. However, he added, "the very concept of 'Islamic financial standards' allows for their adoption by another authorized body. However, this other body is not specifically identified in the draft."

The Deputy Governor of the Central Bank, Abrorkhuzha Turdialiev, responded.

"Standards are indeed set by the Central Bank. Today, traditional banking services operate in exactly the same way—there are direct Central Bank regulations for certain transactions. However, some banking transactions, such as letters of credit, are operated based on international standards. The Central Bank does not need to separately set up procedures for their application," he explained.

Turdialiev noted that Islamic finance should also be based on recognized international standards:

"There are two entities that set accounting and standards through Islamic financial services councils. We must accept them as a basis and work in accordance with them. This will be clear to our foreign investors who wish to invest in Uzbekistan's Islamic banking system."

Speaking about the Islamic Finance Council, the Deputy Chairman of the Central Bank unveiled plans to create a banking ombudsman role. According to him, the new role will significantly reduce the number of disputes between banks and businesses, which currently mostly end up in court.

"Such a role is supposed to facilitate pre-trial relations in the future. Today, we see a great many disputes between banks and businesses, and almost all of them end up in court. But the introduction of an ombudsman role will dramatically reduce the number of court cases in the future, as the Central Bank will be able to intervene at the initial stage and provide clarifications. This can be seen as a new tool for protecting the rights of banking users," Turdialiev said.

He also underscored that in the future, the Central Bank would need an Islamic Finance Council, which would perform a similar function and will be able to reduce the number of errors and misunderstandings in Islamic finance.

"Unfortunately, in Uzbekistan today there are only few experts who have studied this topic and have virtually no experience. Therefore, such a council will serve to prevent errors and misunderstandings," he stated.

In Kazakhstan, the banking ombudsman is an independent individual who resolves disputes arising from bank loan agreements between the bank and the individual borrower.

In Russia, the banking ombudsman's function is performed by the Financial Commissioner, an individual who reviews property disputes between consumers of financial services (including banking services) and financial institutions.