More than 20 million Muslims can get access to Islamic finance instruments and make halal money transactions. In 2023, Russia passed a law on Islamic banking – in the next two years, an experiment on its use in one of the largest countries in the world will take place.
The experiment on the introduction of Islamic banking in the regions of Russia will take place until September 2025, and the territory of the experiment may be expanded in the country.
Participants of the experiment may not set remuneration in the form of an interest rate when making transactions, but will be able to set payments in the form of a variable amount depending on the results of these transactions.
They are also not allowed to finance activities related to the production of tobacco, alcoholic beverages, weapons, ammunition and gambling.
It is assumed that the potential of the Islamic finance market in Russia is about $ 11 billion. This figure was mentioned by Anatoly Aksakov, Head of the State Duma Committee on Financial Market, at KazanForum 2023.
According to Nikolai Zhuravlev, Deputy Chairman of the Federation Council of the Russian Federation, made at KazanForum 2023, Islamic finance has emerged as an independent full-fledged sphere of the global financial market: more than 500 Islamic banking and financial organisations with total assets of more than $ 2 trillion operate in 105 countries.
Experts see in this the prospects for the development of partnership financing in Russia with possible attraction of capital from friendly countries.
The experiment is operating in four regions of the Russian Federation, including the Republic of Tatarstan, which annually hosts the International Economic Forum «Russia – Islamic World: KazanForum» with the participation of the Organisation of Islamic Cooperation (OIC) states. It was on the basis of the results of expert international discussions at the Forum 2022 (KazanSummit 2022) that Russia decided to pilot the launch and legal regulation of the partnership financing mechanism in certain regions.
A relevant draft law was submitted to the country’s parliament, which was supported by the Ministry of Finance and the Central Bank of the Russian Federation. During this period, the first Islamic debit card based on the «Mir» payment system appeared in the Republic of Tatarstan, and a leading Russian bank opened the country’s first
Shariah-compliant office of partner Islamic financing in Kazan, the capital of the republic.
Based on Russian and foreign experience, KazanForum 2023 participants (including representatives of the parliament, the government and the Central Bank of Russia) discussed the prospects of expanding the pilot project to other regions of the country with full-scale legal regulation of this type of business. The experts considered the possibility of adapting the experience of Islamic countries in the development of the Islamic finance market.
The series of events of the Islamic Finance track was attended by representatives of Islamic business and banking interested in developing partnership projects in Russia. KazanForum 2023 was a good opportunity for entrepreneurs to find trade, financial and technological partners, enter new markets and attract investments.
Now, with the adoption of the law and the development of Islamic banking in Russia, it will be easier to do so. New opportunities for Islamic business in Russian regions will be discussed at KazanForum 2024, which will be held in Kazan on 14-19 May 2024.
By that time, the Republic of Tatarstan may have a centre for the development of Islamic banking. Specialists from Malaysia have already been invited to the region, where partnership financing is widely used and rich experience in issuing and applying sukuk has been accumulated. Russian financiers will be able to consult experts on taxation, accounting and product creation, taking into account the specifics of laws in Russia and experience in partnership financing.
Registration for KazanForum-2024 is available on the official website of the Forum.
Correspondents and media executives are welcome to participate in the Forum programme and special events for the media. Media accreditation will be open soon!