Islamic Banking, a New Opportunity for Russia

There are about 16 branches of financial institutions of Islamic banking in Russia at the moment. In the current geopolitical situation, these institutions may open additional opportunities for the Russian economy.

Such a statement was made by the Head of the Republic of Tatarstan, Rustam Minnikhanov, within the framework of the IV International Economic Forum “Russia – Islamic World: KazanForum 2023”. “Today our country is facing new challenges, the financial and banking systems have turned their backs on us.

This means that we must find those partners with whom we can work. And I am very grateful to our guests who came from abroad. More than 80 countries participate in our forum. This suggests that for the Islamic world, Russia is the point from which you can work,” the Head of the republic emphasized.

It should be noted that about 15,000 guests from 84 states take part in the forum events. The government notes that Russia’s cooperation with Muslim countries has acquired a strategic character. Thus, according to Deputy Prime Minister Marat Khusnulin, the growth of trade between Russia and the states of the Organization of Islamic Cooperation (OIC) has amounted to almost 30% over the past three years.

Many domestic economists note the great potential of the Islamic banking system in our country. Thus, the economist Marat Aidagulov, in his analytical material “Russia is actively opening the market for Muslim countries”, assessed the expected effectiveness of using Islamic banking as one of the financial instruments for investment. “The Islamic finance system can become a good alternative to the classic Western options, as well as help attract financial resources from the countries of the Middle East and Southeast Asia,” writes Marat Aidagulov in his article.

At the same time, the expert recalls that, despite the conditionality of religious ethics, Islamic banks are secular commercial structures. “Islam is the second most widespread religion in Russia after Orthodoxy, and a huge number of Muslim entrepreneurs cannot use the services of conventional banking due to religious reasons – Islamic banking is necessary for them. At the same time, contrary to myths, not only Muslims can use such services. Despite being conditioned by religious ethics, Islamic banks are secular commercial structures, albeit with a number of restrictions.

Most of the clients of these banks are secular people who are attracted by these conditions or the stability of the financial system,” Aidagulov stressed. Recall that in December last year, the State Duma adopted in the first reading a bill on the pilot implementation of Islamic banking. Four regions of Russia participate in the “pilot”. In addition to Tatarstan, the project is being implemented in Dagestan, Chechnya, and Bashkortostan. The experiment began on February 1 and will last for two years.

The trend in the development of Russia’s economic relations with Muslim countries was also noted by Turkish President Recep Tayyip Erdogan and ex-OIC Secretary General Yusuf bin Ahmad al-Uthaymeen.

source: Shafaqna