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Russia's largest bank enters Islamic finance scene amid mounting pressure for non-western credit

RUSSIA: Sberbank of Russia, the country's largest bank, has launched a pilot project in partnership with the Republic of Tatarstan designed to develop Islamic finance in the region, a move that is likely to broaden financing avenues for the sanctions-slapped country.

As international sanctions continue to weigh heavily on Russia driving it to seek alternative financing options and forge new relationships with non-Western nations, Islamic finance has increasingly gained prominence as a viable solution affording the Federation the leverage it needs to tap the wealth of the Middle East.

Islamic finance activities in the country have been generally minimal and sporadic; however, the past few years have seen a greater push from both the authorities and domestic players. Although a draft law which would have eased Shariah compliant financial transactions was rejected by the Finance Ministry earlier in May, the lower house of parliament is, however, seeking to re-propose legal amendments to facilitate Islamic finance activities, with the Russian Orthodox Church as part of the committee negotiating the legal changes.

Holding one-third of aggregate banking assets in Russia and owning the largest distribution network in the country, Sberbank's formal commitment to Islamic finance could prove instrumental in propelling the Federation's Islamic finance sector forward.

"Sberbank values the prospects for developing Islamic finance. Cooperation in this area will promote the socioeconomic development of the Republic of Tatarstan," affirmed Herman Gref, CEO and chairman of the executive board of Sberbank, in a statement. Through this agreement, both Sberbank and the Tatar government will study options and issue proposals to develop the sector.

In a region whose Islamic finance development has perhaps been overshadowed by the likes of other CIS countries such as Kazakhstan and Azerbaijan, Tatarstan is giving its neighbors a run for their money with this landmark agreement with powerhouse Sberbank. And with strong support from the government, including the Republic's acting president Rustam Minnikhanov, the global market can expect concrete developments from this part of the world in the near future.

ibaislamic.az

Added:17 August, 2015 07:03, Views:966, ]]>Print]]>
 
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