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Russia’s gravitation toward Islamic finance is gaining momentum as its economy continues to take a beating on the back of a strained relationship with the west; and the sanctions-slapped country is now closer to realizing its Islamic finance goals with industry heavyweight Malaysia lending support to the Federation.

In the past six months, the government of Tatarstan has been working closely with Malaysian entities namely Universiti Tun Abdul Razak and IBFIM as well as Kazan-based Islamic Business and Finance Fund (IBFD Fund) to study the possibility of introducing Shariah compliant banking to the Republic. With the intent of using Tatarstan as the launchpad for widespread adoption of Islamic banking in the Federation, the Malaysian-Russian consortium this month sought comments from key authoritative Russian bodies including the central bank as well as veteran Malaysian Islamic finance figures on its preliminary findings.

Covering a wide range of topics including strategies to implement Islamic banking (both on a stand-alone and window basis) and Takaful as well as a detailed look on potential market demand and Islamic finance consumers, issues such as taxation, regulation, awareness and global practices were highlighted and discussed during the market feedback.

While Islamic financial activities in Russia have been in the main minimal and sporadic, these industry players are of the opinion that the country is now ready to embrace the Shariah compliant financial instruments and it is hoped that Tatarstan would be the springboard to enact regulatory changes to spur Islamic finance in Russia. Linar Yakupov, the president of the IBFD Fund, concurred adding that «the feasibility study would become a serious platform for the development of the Islamic finance industry in Russia».

Malaysian players aside, Arab nations are also keen to build stronger banking ties with Russia with Bahrain calling for the country to establish an Islamic bank in collaboration with Middle Eastern nations, according to state media.

The finalized version of the study would be presented at the IFN CIS & Russia Forum on the 9th December in Moscow, which is fully supported by Russian state authorities and leading global Islamic finance entities including the Islamic Corporation for the Development of the Private Sector.