Russian authorities set to allow new non-credit financial institutions specialising in Islamic banking.
Russia is drafting a new law to regulate Islamic banking in the country, a growing sector that could help state-run banks hit by Western sanctions to attract investors from Muslim-majority countries as well as cater to domestic customers.
Islamic banking, assuming the absence of any interest income, may be legalized in Russia soon. Non-credit financial institutions of a new type - partnership financing organizations (OPF) will be able to deal with it. The Central Bank will become their regulator, it will also keep a register of such companies and exercise supervision over them. OPFs will be able to raise funds from citizens and legal entities and invest them in projects that comply with Islamic law on a partnership basis, which is generally reminiscent of trust management. The Central Bank is ready for innovation, but prefers to first test the new regime in a limited number of regions.
The mass-circulated Russian daily Kommersant reported that the non-credit banking institutions would operate as financing partnership organisations (FPO) and offer Sharia-compliant financial products to their customers.
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