Russia is drafting a new law legalizing and regulating Islamic banking in the country, and it will be initially introduced in four Muslim-majority republics as part of a plan, including Chechnya, Dagestan, Tatarstan, and Russian Bashkiria.
The non-credit banking institutions would function as Financing Partnership Organizations (FPO), which, according to the Russian daily Kommersant’s report, will offer Sharia-compliant financial products and fit Muslims’ needs.
The same report said that FPOs would be under Russia’s Central Bank’s control to oversee all operations.
The State Duma is preparing to adopt a new law based on Islamic banking in Russia; the news was reported by the Association of Banks of Russia with reference to Anatoly Aksakov, Chairman of the State Duma Committee on Financial Markets, announced on Friday, July 15, 2022, that the new system will be introduced in four countries which are Dagestan, Chechnya, Tatarstan and Bashkiria, Russia, as a first step.
He said, “these initiatives are gaining attention because some countries in the Middle East and Asia have shown their interest in investing in these Russian regions, but they have not made this investment for religious reasons.”
In a previous interview with RT, Aksakov said that if this plan works, the project can be launched throughout Russia.
He added that the initiative would attract entrepreneurs from the Middle East to invest in Russia.
After being hit with western sanctions because of the ongoing military operations in Ukraine, Russia has taken this step in a bid to lure alternative investors from Muslim countries.
Last year the State Duma Committee on Financial Markets set up a working group on Islamic finance to encourage investment from the UAE and other Muslim states.
“The global Islamic banking sector is said to be growing at an annual rate of 14 percent and is estimated to be worth $1.99 trillion, accounting for a six percent share in the non-Islamic global banking industry,” according to MEMO.
