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Russia’s largest banks show interest in Islamic banking — Tatarstan’s president

May 13, 17:25 UTC+3 VIENNA
According to Minnikhanov, Islamic banking could be very attractive for Russia now when its access to the Western financial markets has been limited
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© Egor Aleev/TASS

VIENNA, May 13. /TASS/. Russian largest banks are interested interest in plans of Russia’s republic of Tatarstan to introduce Islamic banking, President of Tatarstan Rustam Minnikhanov said in an interview with TASS.

"Currently, Sberbank is considering this tool (Islamic banking - TASS) very seriously", as well as VEB, he said.

According to Minnikhanov, Islamic banking could be very attractive for Russia now when its access to the Western financial markets has been limited.

"Taking into account Russia’s restricted access to financing we consider it to be attractive to use the mechanism of Islamic banking," Minnikhanov said.

"There are instruments that already can be applied, some banks have already their preliminary developments," he said.

The President of Tatarstan added that fully implementation of the project will require amendments to the legislation.

But, according to his forecast, the volume of investments that could be attracted in Tatarstan via this financial instrument "won’t be big".

In early 2016, a working group on Islamic banking under Russia’s Central Bank approved a "roadmap" for the introduction of this mechanism in Russia.

In March, as part of the roadmap implementation, the first in Russia Center of Partnership Banking opened in Kazan, capital of Tatarstan.

The center will operate in compliance with the principles of partnership financing applied on the countries of Southeastern Asia and Middle East.

Sharia prohibits acceptance of specific interest or fees for loans of money (known as usury). For this reason Islamic banks raise their incomes directly from profits of business projects they finance. When attracting money from individuals Islamic banks don’t pay income on deposits to their clients expect for inflation rate, which is set by the state.

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