German Gref, Chairman of the Russian bank Sberbank -the largest bank in Europe- said that the central- working actively to the development of Islamic finance in Russia. ” We will strongly contribute to the development of this instrument, “he said. he has already held a series of meetings in Tatarstan with Arab investors. ” the commitment to the problems in international markets is very important project , “he says.
Tatarstan is a key area where the Islamic bank is actively developing. Investors from the Gulf countries are willing to invest heavily in the development of the financial system “ alternative “in Russia, given the significant demand on the part of the Muslim population.
In Islam, the usurious activity involving obtaining interest income is not permitted. Business transactions based on a business or a real business should not be linked to cases prohibited by Sharia [ Muslim norm , note], such as gambling or alcohol.
Islamic finance has emerged as a modern phenomenon in the 1960s in Egypt. In fact, it was the mutual assistance funds, which used to part the model of similar institutions in Germany. At that time it also became a savings fund in Malaysia, for accumulating money for the pilgrimage. Subsequently, Islamic banks have developed in the United Arab Emirates, where in 1975 was founded Dubai Islamic Bank .
These financial institutions operate mainly in Malaysia and the Middle East, but are also common in London. Islamic investments in Britain increased by 150% over the last seven years, with a volume of £ 1.3 trillion in 2014. The United Kingdom has even announced plans to issue Islamic bonds.
Some financial institutions operating according to the principles of Islamic finance, also exist in Russia.
According to Tagiyev Samir, Business Development Manager in the CIS (Confederation of Independent States) and Europe of the Islamic Corporation for the Development of the private sector: the rapid growth of ” Muslim population “in Russia contributes to the fact that in coming years, we expect a strong increase in demand for Islamic finance tools.
Note that the ” Islamic finance “uses the same tools as the usual financial system, but unlike the basic technique of percentage, it is built on the fact that the credit percentage is replaced by the award of a hand in business, and therefore a share of profit. The bank shares with his borrower all risks. Thus, the credit financing through Islamic finance deals exclusively targeted character.
Now it is necessary to develop a legal framework to integrate the Islamic Bank in the financial system of Russia. According to expert estimates, if done, not only in Russia but also in the countries of Central Asia, since 2018, the volume of Islamic financial assets could reach $ 24 billion.
Islamic banks can not invest in risky projects and assets for speculative profits. In general, the funds must be invested only in assets and in long-term projects.
By accepting a deposit, the bank must invest this money in the company of another. This project or business is known and is always to negotiate. Profits and losses are shared between the bank and the client in a report. The contract of such a deposit is called ” mudaraba “.
In fact, the bank does not act like a traditional lender, but as a co-investor.
Customers are able to choose a company or a project after receiving virtually all information about it. The choice is wide, with the exception of business with alcohol, pork, etc. Because of these special features, the investor must be prepared to losing all his money or a lower than expected yield.
Traditional credit does not exist in the Islamic Bank, but it is possible to use the bank’s money. The bank may acquire a product and sell it to a person at a higher price. This customer has the right to pay the cost of the product gradually. As long as the cost is not paid in full, the product is not held by the client. However, even if the payment schedule is not met, there is no delay penalties. This financial arrangement is called ” Murabaha “. In the traditional financial world, its analogue is leasing.
Another possibility is to obtain financing ” musharaka “: the bank simply becomes a partner and an investor of a particular company, after checking that the project complies with the norms of Islam. As long as the amount invested by the bank is not repaid, the bank has the right to demand full disclosure of information on the company’s status.
In addition to these basic forms, there are also lending ” kard-ul-hasan “or interest-free loan, the repayment which the borrower pays a fee at its discretion. But usually it is used between individuals.
The obligations in the usual form are prohibited in countries governed by sharia because they are based on “income interest “.
However, Islamic finance has a tool to engage in debt financing – ” sukuk “Islamic equivalent of bonds. The ” sukuk “provides a non-guaranteed income from the profits made by the company funded, that is to say the target. The high level of demand on bonds ” Sukuk “did that in 2014, 19 countries have entered the bond market” sukuk “. In transactions on placement of ” sukuk “in Great Britain, South Africa and Hong Kong, there has been a substantial oversubscription. An interesting feature of this market is that demand for ” sukuk “euro persists. The Islamic Development Bank (IDB) and Luxembourg have set emissions obligations ” sukuk “in euros.
Governments that issue their first ” sukuk “create a rule, a benchmark yield curve, which provides an effective way of charging for the tool. The purpose of sovereign issuers also encourage local companies to enter the market ” sukuk “(so they can enjoy the benefits, such as the huge database of investors and a significant amount of cash to invest in assets with a low risk level).
In the future, “the placement of the bonds Sukuk “will be determined by the same factors: large-scale infrastructure projects in the Gulf countries and the financing of budget deficits of some Asian and African developing countries.
Translation: International Network