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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.
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