Russia and Pakistan intend to use Islamic finance to bring the two nations closer together economically amid a drive by Moscow and Islamabad to strengthen Russo-Pakistani relations through enhanced military cooperation.
Russia and Pakistan intend to use Islamic finance to bring the two nations closer together economically amid a drive by Moscow and Islamabad to strengthen Russo-Pakistani relations through enhanced military cooperation.
An MoU, supported by the Trade Development Authority of Pakistan (TDAP), was signed between Kazan’s Islamic Business and Finance Development Fund (IBFD Fund) and TAWUN, a Pakistani Shariah consulting firm under which both parties will jointly support Russian and CIS financial institutions to launch Shariah compliant products and services, expand their clientele and penetrate new markets as well as secure additional funding and investments from OIC countries. SM Muneer, CEO of the TDAP, has hailed this partnership as an «important milestone» in the trade and business relations between the two countries and has pledged his full support in realizing the objectives outlined by the MoU.
While Pakistan has an established Islamic banking and finance market spanning decades, Russia, on the other hand, is relatively new to the industry. The Kremlin is, however, aggressively pushing to develop its Shariah finance market in a bid to lure Gulf wealth as its economy continues to suffer from sanctions imposed by the US and Europe, leaving Russia to turn to the Middle East and Islamic countries to shore up its faltering economy.
Russia is still without a proper regulatory infrastructure (and institutional capacity) to effectively support Shariah finance; however, the world’s largest nation is making steady progress – with the help of Islamic finance heavyweight Malaysia. A working group from the Central Bank of Russia is currently studying the feasibility of engineering a dedicated regulatory infrastructure for Shariah banking services while the country’s largest bank, Sberbank, is on track to execute several Islamic financial transactions in the final quarter of 2016.
Home to the largest Muslim population in the European continent (10% of its population according to Pew Research), Russia holds a compelling Islamic finance proposition, particularly in the Republic of Tatarstan – the strongest Russian Islamic finance advocate – where more than half of the population identify as Muslims, and foreign institutions including TAWUN recognize this. Mehmood Arshad, the founder of TAWUN and the chairman of the Federation of Pakistan Chambers of Commerce & Industry’s Standing Committee on Islamic Banking & Takaful, sees this collaboration with the IBFD as an important step to an active role in Russia especially in Tatarstan. «Pakistan’s Islamic banking and regulatory system is the best in the region and TAWUN has all the necessary experience and competence to share knowledge and experience with our Russian friends», he said.
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