Russia is introducing Islamic banking without the word "Islam"

On September 1, an experiment to introduce Islamic banking began in four regions of Russia. In Chechnya, Dagestan, Tatarstan and Bashkiria, financial products and services operating according to the principles of Sharia will be introduced over the course of two years. However, the words "Islam", "Sharia", "halal" are not mentioned in the law itself.

Federal Law No. 417-FZ "On conducting an experiment to establish special regulation in order to create the necessary conditions for implementing activities on partner financing in certain subjects of the Russian Federation and on amendments to certain legislative acts of the Russian Federation" was initiated by five State Duma deputies and two senators, including Senator from Kabardino-Balkaria Makharbiy Ulbashev. There are no deputies from Chechnya and Dagestan among the authors of the bill. Meanwhile, certain elements of Islamic banking are already in effect in these republics. Thus, in Dagestan, in some stores you can buy goods in installments - under the guarantee of a mullah and male relatives.

The main principles of Islamic banking are the prohibition of interest (riba) and transactions based on uncertainty (gharar). Nevertheless, Islamic banks provide a standard range of services: loans, financing of trade operations with payment in installments, leasing, financing the acquisition of shares in capital.

In Chechnya, for example, the Sheikh Zayed Fund has been operating since 2017. It was opened in Grozny as a result of an agreement between the head of Chechnya Ramzan Kadyrov and the President of the UAE Sheikh Khalifa bin Zayed Al Nahyan. Its founder was the Khalifa Fund for the Development of Entrepreneurship. Over the years, it has approved more than 500 applications from local entrepreneurs who would like to start or expand their business, but for religious reasons could not take out a regular loan. The fund acted as a partner to whom the entrepreneur then paid his share.

According to Sharia expert Alkhazur Tazbaev, Russia needs Islamic banking primarily to attract investment. "Russia closely cooperates with the countries of the Persian Gulf, Asia and Africa. There are many joint projects, dozens of Russian enterprises operate in a number of Arab countries, so Russia's interest in the global Islamic financial system has been brewing for a long time. Islamic banking is also relevant because many Russian Muslims cannot open their own business due to their unwillingness to take out loans with interest. Financial institutions operating in accordance with Sharia norms will help them implement business projects," the expert believes. The experiment will last two years with the possibility of extension. An expert council has been created under the Russian government to monitor and analyze its results. In September, the first organization appeared in the register of participants in the experiment on partner financing - the largest bank in Tatarstan "AK Bars".

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