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Sberbank plans pilot deals under Islamic banking rules in autumn

May 20, 9:59 UTC+3 KAZAN
Russia’s top lender Sberbank plans pilot deals under the rules of Islamic banking, consistent with the principles of the Sharia, in autumn 2016 in the Republic of Tatarstan
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© Maxim Shemetov/TASS

KAZAN, May 20. /TASS/. Russia’s top lender Sberbank plans pilot deals under the rules of Islamic banking in autumn 2016 in the Republic of Tatarstan, First Deputy Chairman of the Executive Board Maxim Poletaev said Friday.

"We have to make a commitment to executive several pilot transactions in autumn," Poletaev said.

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Sharia (Islamic rulings) and is alternative to traditional banking. 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.

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. Currently, the group is involved in discussions on legislative amendments needed for transactions under Islamic banking rules. According to Poletaev, pilot deals may be executed within the limits of the active legislation.

First Deputy Chairman also said that Sberbank will set up an expert group for exploring the potential of the Islamic banking. "We’re planning to seriously delve into this area as it is important for the country for diversification of sources of funding," he added.

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