The Islamic finance market, or interest-free finance, both in Russia and globally is projected to grow rapidly, according to an official from Russia’s largest lender, Sberbank.
Sberbank's Senior Vice President Oleg Ganeev said the Islamic finance market is projected to reach a value of $7.7 trillion by 2025, representing a stable growth rate of 40%.
Ganeev, in an interview with Anadolu Agency (AA), highlighted the progress of Islamic finance in Russia and Sberbank's involvement in this sector. He emphasized that Islamic finance in Russia operates under the principles of "participation finance."
"We adhere to the fundamental principles that underlie these financial instruments. The core principle is the equal participation and sharing of risks, revenues and potential losses in unfavorable situations. This essence of partnership defines our approach in this field," Ganeev explained.
Ganeev emphasized that Islamic finance provides robust protection against the cyclical risks prevalent in the traditional financial system.
He also mentioned that a draft law for a pilot project to test participation financing in Russia was submitted to the Duma, the lower house of Parliament, last year.
Ganeev provided an evaluation of the Russian market, stating, "Currently, we estimate the market at approximately 700 billion rubles ($7.7 billion)."
Furthermore, Ganeev anticipated significant growth in the market size, projecting it to reach 55 billion rubles within a year after the bill's adoption.
He highlighted the immense potential by noting: "At present, our bank's payment line handles transaction volumes of around 22 billion rubles, indicating a tremendous growth opportunity."
Ganeev commented on the significant strides that Sberbank has made in Islamic finance, acknowledging the immense potential and demand within the market.
He emphasized that the parties involved have diverse requirements, primarily focusing on ethical considerations and adherence to specific norms.
Ganeev stressed that these standards primarily aim to establish trust, stating: "It is crucial to create an infrastructure that ensures all transaction participants feel comfortable, and Sberbank actively engages in the development of this infrastructure."
He further mentioned the establishment of a dedicated unit for Islamic finance within Sberbank, staffed with certified professionals.
"We are actively developing the necessary infrastructure. Currently, we offer a range of 13 products that encompass payments, transfers, letters of credit, trade finance and savings," Ganeev elaborated.
Additionally, Ganeev disclosed that they have set up a special investment fund unit focusing on Russian companies that have undergone rigorous auditing processes.
"We've built trust management products, and we're currently working on developing products to finance the needs of corporate businesses and our populations. That's what we call infrastructure. Once all this is established, plus the bill is passed, it will be possible to think broadly that this direction and entry into this business has taken place."
Noting that there is a significant Muslim population in Russia, Ganeev said: "Currently, the Muslim population in Russia is over 20 million, excluding immigrants, and we believe that over 7.5 million of them have a customer base that will work on these principles (Islamic finance).”
“The share of this non-immigrant population will increase to 30%, and 30% is a very large field of activity," he said.
