Pilot project launched to convert ECO into Islamic bank
Islamic Development Bank (IDB) has signed a loan agreement valued at $12 million with the Kyrgyz Republic for financing a 110 KV Aigul-Tash to Samat transmission line and substation project. Approved by the IDB three months prior, the project will provide reliable and sustainable supply of electricity to the consumers in the remote region of the Batken district, which has a population of over 100,000 people, while helping to bring economic development in areas served by the power supply system
Aside from endorsing the agreement, Dr Ahmad Mohamed, President of IDB, during his visit to Kyrgyz Republic at the invitation of the President of the Kyrgyz Republic, also met high officials of Kyrgyz Republic and participated in the launching of the pilot project to convert ECO Bank into an Islamic bank, through a technical assistance grant of $255,000 approved recently for the introduction of Shariah-compliant banking services at the financial institution. ECO Bank was further given a line of financing by the Islamic Corporation for the Development of Private Sector (ICD) and also from the European Bank for Reconstruction and Development (EBRD).
ECO Bank is one the most profitable medium-sized bank in the Kyrgyz Republic, with 70 branches throughout the country. So much so that the management of ECO plans to increase the capital of the bank to make it more efficient and invite any interested parties to participate in increasing the equity of the bank.
To ensure the overall success of ECO's transition into a global industry that has ballooned at double-digit growth rates to more than $870 billion in value over the past few years, the IDB President even suggested that ECO Bank adopt a program for acquainting the business community, academicians, and the media with the nature of Islamic banking services. "While support from the government is important, for the sustainable success of Islamic banking industry, full support from the potential customers, especially businessmen and business women from different sectors of the economy, is essential," he said. "Efforts to be made for gaining that support would be provided by IDB in cooperation with ECO and government bodies of the Kyrgyz Republic, particularly for conducting seminars and workshop in the relevant area."
Meetings of the IDB President with Kyrgyz officials also focused on ways and means to enhance cooperation between the Kyrgyz Republic and IDB. To date, total IDB Group financing in the Kyrgyz Republic amounts over $86 million, over 95 per cent of which goes for the financing of public sector projects focusing mainly on the transport and communications (43 per cent) and energy (26 per cent). The remaining part has been directed to finance the various sectors of the economy.
© Bahrain Tribune 2007
