Russia moves to make Islamic finance permanent, targeting $12B inflow

The Russian government is advancing efforts to convert its Islamic banking experiment into a permanent regulatory system. This development was reported by Izvestia newspaper, citing statements from Alexey Guznov, Deputy Chairman of the Central Bank of Russia.

Transitioning from pilot to permanent law

Islamic finance operates under Sharia principles and has been tested in Russia since September 1, 2023. The initial pilot program covered four regions: Tatarstan, Bashkiria, Dagestan, and Chechnya. Authorities extended this experimental phase last summer through September 2028.

According to Izvestia, state bodies are currently discussing mechanisms to institutionalize participatory financing. One proposed option involves transforming the existing legislation governing the pilot into a permanent statute.

Economic impact and market growth

The shift toward permanent regulation is projected to attract up to one trillion rubles (approximately $12 billion) from Islamic countries into the Russian economy. Additionally, the number of clients utilizing these financial instruments could increase by around 10 million people by 2030.

Structure of the Islamic financial ecosystem

Teymur Iskandarov, Director of Structured Finance and Project Ratings at the ACRA agency, previously explained to Novosti news agency that Islamic finance constitutes an integrated system. Beyond traditional banking institutions, this framework includes a specialized insurance market known as Takaful and a full range of Islamic financial instruments called Sukuk.