KAZAN, May 15. /TASS/. Extending the law on partnership financing, aka Islamic banking, for only three years may scare off potential investors, therefore Islamic banking should be made a permanent instrument in Russia, said the head of the State Duma Committee on Financial Markets Anatoly Aksakov in an interview with TASS.
"We are preparing a bill that should extend the validity of this instrument. So far, it is proposed to extend the validity of the instrument for three years, but I propose doing it for five years. Because many [investors] may think that they will not be able to implement their idea in three years. But in response, the Central Bank says that it is ready to make it a permanent instrument, this is also a decent approach," Aksakov said during the International Economic Forum "Russia - Islamic World: KazanForum."
He added that it is also proposed to introduce a ban on the use of Islamic banking by enterprises that are in bankruptcy proceedings or in a difficult financial situation.
"By doing so, we are sending a signal to investors that only bona fide entities that are in a normal financial position work here. This will further encourage them to interact. Having greater trust, they will be able to invest more in our economy," the lawmaker added.
The experiment to develop partner financing is taking place from September 1, 2023 to September 1, 2025 in Russia’s republics of Bashkiria, Tatarstan, Chechnya and Dagestan. A bill has been submitted to the State Duma to extend the pilot program in partnership financing until September 1, 2028.
Islamic banking means conducting banking activities in accordance with Islamic norms. Payment of interest and derivative interest transactions, transactions with conditions of uncertainty, as well as financing of certain sectors of the economy such as gambling, pork production, alcoholic beverages, tobacco, weapons, ammunition are banned. You cannot finance trade in all abovementioned areas. Common Islamic banking operations are installments, leasing, and equity financing.
About the forum
The 16th International Economic Forum "Russia - Islamic World: KazanForum" is underway from May 13 to 18 in Kazan. The main theme of the Forum in 2025 is ‘Digitalization: New Reality and Additional Opportunities for Expanding Cooperation’.
Representatives of more than 100 countries have confirmed their participation in the forum. TASS is the general information partner of the event.