The Central Bank (CB) of Russia intends to launch a pilot project on Islamic banking in Chechnya and Dagestan in 2023. The regulator is preparing the relevant amendments to the legislation together with the Ministry of Finance.
The initiative is being developed as part of the Central Bank’s measures to develop the financial market in the face of sanctions. The regulator’s report dedicated to this was presented yesterday, August 4. Among the proposals of the Central Bank is to strengthen the role of partner financing in order to attract additional funds to finance business. To develop this direction, it is planned to conduct an experiment in a number of regions. The Central Bank reported “Interfax”that we are talking about the development of Islamic banking.
“The Chechen Republic and the Republic of Dagestan were proposed by the Russian Ministry of Finance as subjects of this project and fixed in the order of the President,” the regulator’s press service said. The Central Bank added that as part of the experiment, it will be necessary to determine the list of necessary financial services and operations, as well as approaches to regulation and supervision.
Under Islamic law, it is forbidden to lend money at interest, so banks, like any other lending institution with their standard products, cannot provide Islamic banking services. In July, the State Duma announced the introduction of draft laws regulating Islamic banking. They will be able to deal with non-credit financial organizations of a new type – partner financing organizations, their regulator will be the Central Bank, Kommersant found out.
Details – in the material “Kommersant” “The Bank of Russia will regulate Islamic banking.”