Tajikistan-based Alif Tech is gunning for Shariah compliance by next year, as does its sister company Alif Bank, which was founded in 2014 on the principles of Shariah.
Speaking to IFN Fintech, Zuhursho Rahmatulloev, a co-founder of Alif Capital (the first iteration of Alif Bank), said that Alif Tech is also looking at expanding to Russia, with a soft launch aimed for next year. The fintech company is, additionally, eyeing a presence in Pakistan, Indonesia, Bangladesh and Egypt.
Starting out as Alif Capital, a microcredit institution, it opened up to microdeposits and became a licensed bank as Alif Bank in early 2020, while still operating as a de facto Shariah compliant bank. In 2019, Alif Bank expanded to neighboring Uzbekistan, but as Alif Tech, a fintech company running a marketplace platform that connects its partner merchants to consumers. Like Alif Bank, Alif Tech’s operations, products and transactions are structured after Shariah principles — as closely as they can be.
“Alif Tech has around 10 partner merchants currently, and a portfolio that we expect to be at or above US$12 million by the end of 2020,” Zuhursho said. The fintech company is currently establishing partnerships with conventional banks that will allow those banks to look into Shariah compliant transactions — which is the only way Alif Tech operates.
“We are currently consulting with a Shariah scholar in Malaysia to get some certification or pronouncements on our products,” Zuhursho said, which would aid them in their expansion plans. But for now, Shariah compliance certification is not something they are aggressively pursuing.
“It was a matter of personal preference for us when we first started out that our operations comply with Shariah principles,” Zuhursho explained. “Unfortunately, there was very little regulatory support, in both Tajikistan and Uzbekistan, especially before 2019, that we could rely on. One of our major issues that could not be resolved quickly was double taxation, for instance.” The lack of certification had not pushed customers and potential clients away either, Zuhursho said.
The company instead operated within the existing conventional system, but structured all operations, products and transactions as closely to Shariah compliant ones as possible.
“For sure, once Islamic finance regulations are stronger and finalized, in both Tajikistan and Uzbekistan, we will lobby for Shariah compliant certification in a more aggressive manner,” Zuhursho said.