Russia is among the largest newsmakers in the world’s political and economic arena. Yet, in the world of Islamic finance, it still lags behind the rapidly developing industry.
The year 2014 brought changes for the Russian economy. The sanctions imposed by the European countries and the US and historically low oil prices have led to prices of many goods to double in the internal market, and this concerns not only imported items. Businesses have lost access to traditional finance and most banks supported by the government can suggest only limited financing at a very high cost.
Though the Russian economy is relatively stable, the market is troubled about the future.
During his speech at the annual Gaidar Economic Forum on January 14-16 Dmitry Medvedev, the Prime Minister of Russia, called for the development of sectors that could substitute the place of imports in the economy.
At the same forum, a session was dedicated to Islamic finance and its development prospects in Russia, thus confirming that the market has shown greater interest towards the industry.
Among the speakers at the session were Linar Yakupov, director of the Islamic Business and Finance Development Fund, Bulat Mulyukov, chairman of the Centre for Islamic Economics and Finance Development (CIEFD), Murad Aliskerov, director-general of the Islamic financial company, LaRiba Finance, and Victor Chetverikov, general director of the National Rating Agency.
For the first time in Russian history, an expert commission of the National Rating Agency, the second largest independent Russian rating agency, awarded diplomas this year to those who have made contributions to the development of Islamic finance in the country.
Among those awarded were: Aliskerov, for the creation of an efficient Islamic financial company, Rashid Nizameev, CEO of Amal Financial House (Kazan), for efficient management of the company, and Mulyukov for disseminating information in the sphere of Islamic finance.
Indeed, 2014, especially its second half, was filled with economic and finance forums and seminars, which embraced among other topics, the issue of Islamic finance. The industry, which is capable of bringing new investments into the market, finally seems to be taken more seriously. Islamic finance is now being studied at various government bodies and institutions, both at the federal and regional levels.
At the same time, experts of Islamic finance and Islamic financial companies pressed ahead with their work.
Moscow Halal Expo, the annual meeting platform for Islamic financial companies and experts from all Russian regions, held a seminar devoted to the bases of Islamic finance. LaRiba Finance, based in Dagestan, was named the ‘Halal Company of the Year’ in an annual contest held by Moscow Halal Expo along with the National Rating Agency.
At a round table conference titled: ‘The practice of Islamic Business and Finance in Russia, Success Stories, New Horizons of Development’, Shaikh Abdulkaher Qamar, deputy chairman of the Islamic Fiqh Academy, talked of fatwas in economics, including Islamic finance.
Behnam Gurbanzade, head of the working group on the implementation and development of Islamic banking in the International Bank of Azerbaijan, announced the organisation’s willingness to offer services in Islamic finance to the Russian market.
Mulyukov said the CIEFD was created to solve problems related to the development of Islamic finance in Russia.
Aliskerov said the relatively high cost of Islamic financial instruments in the Russian market is related to the absence of any support from the government.
Rashid Nizameev, director of Amal Finance House, spoke about the pricing of Islamic financial services market in Russia.
Isa Barkhaev, executive director of EC Fikra, shared his experience on the evaluation of contracts for Shariah compliance.
In 2014, three AAOIFI Shariah standards were translated and published in the Russian language. In November 2014, the delegation visited Bahrain to meet the new secretary general of the main Shariah standard setting organisation.
In 2015, it is expected that the discussions over the best legal framework for Islamic financial companies will be continued on various levels. The process is likely to be time-consuming.
Islamic financial companies in the Russian market are likely to make attempts to combine efforts for creation of a fund that would attract investments. However, a law on Islamic banking is the need of the hour in Russia as it will facilitate international Islamic investors planning on entering the market.
*This excerpt of an article was originally published on albawaba on 16 February 2015. Read the original article here.