KAZAN, may 10. /TASS/. Islamic banking can be a catalyst in attracting investments from the Middle East in the Russian economy. This opinion was expressed on Thursday the Director General of the Dubai Islamic Bank Adnan Chilwan at the plenary session “Russia – Islamic world: the driver of the international economy” within the framework of KazanSummit.
“I believe that Islamic Finance will be the catalyst that will facilitate the flow of investments to Russia. Islamic banking has all the tools for investing in non-Islamic countries, countries that are not members of the Organization of Islamic cooperation (OIC). I mean the UK, Hong Kong and South Africa – all of them attract Islamic investment. If you look at the mixed method of raising funds, 60% of investment in these countries came from the Middle East, from the Islamic Bank”, – said Chilwan.
In his opinion, the role of Islamic Finance in attracting investment from the Middle East in the Russian economy are still small, but there are at least four areas where it could grow significantly. We are talking about investing in health, education, infrastructure projects and the real estate market.
In this regard, Chilwan stressed that Tatarstan can become hub of Islamic Finance in Russia, because the tasks outlined in the development strategy of Kazakhstan until 2030, similar to those solved in due time the authorities of the United Arab Emirates. “Smart medicine, the development of infrastructure is exactly what the UAE did 30 years ago, so I see so many similarities between the UAE and Tatarstan. I think Islamic Finance can be a catalyst for attracting investment from the Middle East, making Tatarstan a hub of Islamic Finance”, – said Chilwan.
Islamic banking has the potential not only in the implementation of large infrastructure projects, but also in investing in small and medium enterprises and even micro-Finance, the Vice-President of the Islamic development Bank group Zamir Iqbal. “We’re not trying to compete with other development institutions, we rather complement their efforts, bringing another valuable contribution to the overall goal. Just our financing instruments other, we use Islamic principles,” said Iqbal in plenary.
For the successful development of Islamic banking requires that it was well developed financial sector and, ideally, legislated opportunities for doing business in accordance with the rules of Islam, he said.
Islamic banking refers to conducting banking activities in accordance with Islamic norms – in particular, prohibited lending rates and various financial speculation. Religion forbids Muslims from usury, therefore Islamic banks do not give out classic loans at interest, and engage in other forms (installment, leasing, equity financing). Banks directly receive income from the profits of the business projects in which they invest, attracting the money of individuals. the Islamic banks do not pay the clients income on deposits, with the exception of the inflation rate, which is set by the state.
Cooperation of the Islamic world
According to Tatarstan President, head of group of strategic vision “Russia – Islamic world” Rustam Minnikhanov said that cooperation of the countries of the Islamic world against the backdrop of crisis in international relations.
“The modern system of international relations is going through difficult times: economic and migration problems, conflicts between States – the processes that painfully affect the entire Islamic world. Need to create new sources of stability and sustainable development. The cooperation of countries and regions today is of particular importance,” – said Minnikhanov.
He added that each country and region has its own traditions, but they should not become the cause of “hatred, mistrust and conflict.”
The establishment of a legal framework
The issue of creating an alternative financial system for a long time and is particularly acute on the agenda, and the sector of Islamic Finance is one of the solutions to this problem, said the Director of analytical Department of company “Alpari” Alexander Razuvaev.
“For a quick introduction of Islamic banking in the Russian financial system it is necessary to create a legal framework. The Bank of Russia is already working on it. Supplement the legislative framework in the field of regulation of banks required in connection with the fact that Islamic banking is significantly different from the traditional” – he said, adding that Islamic banking has no concept of “percentage”.
“Taking the Deposit, the Bank undertakes to invest these funds in any business project by a third party. It will be for the projects, the customer and the Bank stipulate in advance, and the profits and losses made by the investment is divided between. In fact, the Bank becomes a co-investor, in connection with what he is interested in how to invest in a profitable business,” – said Razuvaev.
10-12 may in Kazan hosts the international economic summit “Russia – Islamic world Forum”. For the past ten years, the site assembles representatives of international organizations, public authorities, financial institutions, embassies, members of parliaments, leading investors and businessmen, top-managers of Russian and foreign companies.
The summit has established itself as a successful business platform to establish new contacts and to showcase the economic opportunities and investment potential of Russia.