Islamic banking launched in Tatarstan
The law, which establishes the legal basis for partnership financing in Tatarstan, Bashkiria, Dagestan and Chechnya, came into force on September 1.
The law regulates the mechanism of Islamic banking, which is called partnership financing, since it is based on the principle of partnership between the bank and its clients in the distribution of profits and losses.
The bill was adopted by the State Duma in the first reading on December 21, 2022, in the second reading on July 18, 2023. It provides for an experiment involving the establishment of an experimental legal regime for partner (Islamic) financing activities on the territory of individual constituent entities of the Russian Federation. Regions with the largest population professing Islam were selected as pilot regions.
Head of the Investment Development Agency of the Republic of Tatarstan Talia Minullina: “I am sure that the adopted law will bring satisfaction to the 20 million Muslim ummah of Russia. Investors now have an excellent opportunity to be the first to try mutually beneficial banking mechanisms. The demand for Islamic finance is very high not only among Muslims. The reason for this is the principles of partnership financing, which are based on honesty, ethics, materiality and the principle of sharing the risks of financiers and clients.”
By law, banks, financial organizations, legal entities registered in the form of a consumer society, foundation, autonomous non-profit organization, business entity or partnership can provide partnership services. Moreover, such organizations or their branches must be registered in the pilot regions and included in the register of the Central Bank of the Russian Federation.