Islamic Banking discussed in the State Duma of Russia

Date: 04.04.2015,  Автор: Translated by Natalya Ergen

Rountable on Islamic Banking at the State Duma of RussiaOn 18 March 2015 the “Challenges and prospects of Islamic banking implementation in Russia” roundtable discussion took place at the State Duma Committee on financial market.

The meeting was attended by the representatives of the Central Bank of Russia and the Federation Council, executive authorities, large financial institutions and banks of Russia and Azerbaijan, as well as the representatives of the embassies of Egypt and Iran.

The discussion was moderated by Dmitri Saveliev, Deputy Chairman of the State Duma Committee on financial market, who had brought to the State Duma the first bill (regarding the repeal of the ban on banks’ commercial activity) aimed at introducing Islamic banking in Russia.

The experts agreed that due to the current economic conditions the Russian Federation needs urgently to diversify the banking system, and defined Islamic finance as one of the promising sectors in this field.

Rountable on Islamic Banking at the State Duma of Russia“Establishing Islamic banks in our country will help to increase trust to our banking system in the whole”— said Alexander Torshin, Deputy Chairman of the Central Bank of Russia. “We don’t reject the idea. The Central Bank is ready to consider such initiatives as long as they are reasonable and legitimate”.

The participants pointed out that the practical implementation of Islam banking requires considerable changes in the Russian legislation.

“I would like to draw your attention to the challenges faced by the working party on Islamic finance under the Federation Council” — emphasized Sergei Batin, senator. “ It is so-called double taxation for one thing. It is difficult to overcome this obstacle within the framework of the current legislation. I wish we could work in a constructive way and witness the issue of a federal law enabling Islamic banking implementation in Russia”.

Rountable on Islamic Banking at the State Duma of RussiaDespite existing legislative impediments, the International Bank of Azerbaijan expressed its interest in Russian customers. The launch of the pilot project based on Islamic financial principles is scheduled for April in Moscow.

“We are absolutely ready for cooperation. Our pilot project will employ funds in the sum of USD 1 million” — said Behnam Gurbanzade, the director of Islamic banking department of the International Bank of Azerbaijan. “After that, within the framework of the current legislation, the funds will be redirected to 3-4 large-scale Moscow projects. We will see how it works”.

Madina Kalimullina, Director of Economics Department of the Russia Muftis Council raised the question regarding using specific terms to denote Islamic financial institutions. Referring to the experience of Turkish and British colleagues, she noted that the alternative banking institutions of these countries have names not related to Islam. Besides, Madina Kalimullina emphasized the importance of demonstrating the willingness of Russia to work according to Islamic financial principles.

Rountable on Islamic Banking at the State Duma of Russia“International recognition is an important aspect. Russia should show its openness for working with Islamic countries. Nowadays many Islamic banks are expecting clear-cut decisions from the Russian side” — said Madina Emirovna. “Apart from that, we need to offer them an appropriate field of activity, an appropriate infrastructure”.

During the roundtable discussion the experts became acquainted with practical examples of using Islamic financial tools within the framework of the current legislation, discussed the issues of ethics and shariah control over Islamic banks’ activity, and defined the precise steps to take in order to set the wheels of Islamic system in motion.

The discussion resulted in the decision to create an expert and advisory board with a view to amend certain legislative laws of the Russian Federation.

“We are going to establish an expert working group on drafting bills” — summarized Dmitri Saveliev. “I invite you, dear colleagues, to participate in it within the frames of your organizations. We will be happy to defer to your expert recommendations and will take them into account in our legislation”.

The results of this work will be announced at the next large-scale meeting, which will take place in May. International Forum "Islamic Finance and Real Economy" embracing the issues of Islamic finance regulation and Islamic investment promotion will take place within Moscow Halal Expo 2015 at Crocus Expo, on May 21.

Presentation by Madina Kalimullina (download)


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