Finance Academy discussed the theory and practice of Islamic financial model in Moscow

The international conference “Problems and prospects of Islamic finance and international monetary and financial relations” was hel  at the Finance Academy under the Government of the Russian Federation in Moscow.

Within the framework of the presentations and discussions a wide range of issues was talked over, from the history of modern Islamic banking, experience of implementation of Islamic financial institutions in various countries (including the post-soviet Kazakhstan and Kyrgyzstan) to the prospects of their development in Russia.

It was mentioned that Islamic banking in its modern interpretation initiated in 1963 with the opening of the Mit Ghamr Local Savings Bank in Egypt, 30 years later – in 1993 – there were already more than 100 banks of that kind, and nowadays there are more that 300 Islamic banks or Islamic windows in conventional banks in the world.

Nowadays within the bounds of the Islamic financial model are used Islamic analogues of insurance, bonds, investment funds, project financing. The growth of Islamic analogues of traditional financial transactions occurs rapidly. As F.Gadzhiev, the representative of the department of project and structural financing of PC “Gazprombank” said, the total project financing that was carried out on the principles of Shariah in 2005 made up 15 billion dollars, and in 2008 – more than 70 billion dollars, while this was implemented only in 1994.

In 2008 the International Monetary Fund held a study of activity of 397 conventional banks and 77 of their Islamic analogues. The study revealed that Islamic banks with a capitalization of less than 1 billion dollars are one-third more effective than their traditional counterparts, and banks with a capitalization of more than 1 billion dollars are 25% more effective.

That’s why, as well as because of the greater stability of Islamic financial institutions during the global economic crisis, a lot of people pay attention to the Islamic financial instruments. As A.Mukaman, the representative of the National Bank of the Republic of Kazakhstan, said, amendments to the existing legislation, including the Civil Code, that allow the functioning of Islamic financial institutions, were introduced in his country, and in early 2009 a special law was passed. Nowadays the bank “Al-Hilal”, the insurance company “Takaful” and the investment fund “Fattah Finance” are open in this country.

M.Kalimullina, the representative of the Russia Muftis Council, talked about what steps had been made in Russia in order to develop alternative financial institutions in our country. Among these activities is a public inquiry for the purpose of ascertaining the need for Islamic financial products, educational programs. In June 2010 the exhibitions “Moscow Halal Expo 2010” and “Arabia-EXPO 2010” will be held in Moscow. In the near future standards for various types of Islamic financial products, prepared by the Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI) will be published in Russia. While the economic suitability and the demand for these products on the territory of Russia are obvious, the problems of legal regulation and compliance with the Russian legislation require further study and discussion. N. Tkachyov, the company lawyer of the LLC “Transtelekombiznes” spoke on this subject at the conference. According to him, for the implementation of the operation mudaraba can be used the organizational form of unit investment trusts, fur musharaka – society in participation, for murabakha – consumer crediting.

On the results of the conference participants adopted a resolution.

source : muslimco.ru

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