Islamic banking gaining popularity in the world and it has 14 % share in global market. There are more than 560 banks and over 1,900 mutual funds around the world that comply with Islamic principles. Between 2015 and 2021, Islamic financial assets grew to about $4,000 abillion from $2,170 billion and are projected to rise to roughly $5,900 billion by 2026, according to a 2022 report by the Islamic Corporation for the Development of Private Sector (ICD).
Russian is a very important and highly influential country and important player in the global power game. United States of American and European countries are trying their best to isolate Russian in global scenario but they received setbacks in implementing this policy. Russia has very good and strategic relations with China and Iran. It has good relations with Saudi Arabia, Pakistan, Oman and many African countries. Russian President won the hearts of Muslim community by giving statement in condemning insult of Quran and other Islamophobic incidents in western countries.
Russia is the largest country in the world encompassing one-eighth of the earth’s inhabitable earth mass. Russia extends across eleven time zones and shares land boundaries with fourteen countries. It is the world’s ninth most populous country. Russian economy stands the ninth largest by nominal GDP and the sixth largest by GDP purchasing power parity (PPP). Its mineral and energy resources are the world’s largest and its figures for oil production and natural gas production rank high globally. Russia possesses the largest stockpiles of nuclear weapons, and has the fifth largest military expenditure. Russia is also a permanent member of United Nations Security Council (UNSC) and enjoys veto power. It is also a member of G20, The SCO, BRICS, The APEC, The OSCE, and the WTO. It is also a leading member of CIS, the CSTO, and the EAEU. Russia is home to 30 UNESCO world heritage sites.
It has an area of 17,098,246 sq km which is twice larger than USA, the largest among the 234 countries of the world and is 11% of the total earth mass.
GDP (PPP) : US$ 4,650 billion (2022) 6th largest in the World
GDP (Nominal): US$ 2,133 billion (2022) 9th largest in the World
GDP per Capita (PPP): US$ 31,967
HDI: 0.822 very high
It has the world’s fourth largest coastline of over 37,653 kilometers. Russia by landmass is larger than three continents, and has the same surface area as Pluto. Russia is one of the world’s only three countries bordering three oceans, has links with a greater number of seas.
Muslims around the world with a population of 1.75 billion are about 25% of the world population. There are 57 Muslim countries with majority population of Muslims while there are many other countries where Muslims are in minorities but they are important part of those countries. These countries like China, Russia, France, India, Germany, United States of America have Muslim population in millions. Islamic Finance is considered safer one. Financial justice is a requirement that helps Islamic finance products function in a Shariah compliant way. Western financial system looks at making profit through interest payments and makes the beneficiary liable for any risk. Islamic finance paves way for the sharing of profit/loss and risk involved in proportional manner. Financial justice is a basic requirement for the functioning of Islamic finance products. Western or conventional financing looks forward to profit through interest payments and makes the beneficiary completely liable for any risk. Contrary to this, Islamic financing paves way for the sharing of net profit/loss and the risk involved in a proportional manner between the lender and the beneficiary. Therefore, if a financier is expecting a claim on profits of a project, it is necessary that he/she should also carry a proportional share of the loss of that project. In Islamic finance, investments are approached with a slower, insightful decision-making process, when compared to conventional finance. Companies whose financial practices and operations are too risky are usually kept away by Islamic financing companies. By performing intensive audits and analyses, Islamic finance promotes the reduction of risk and creates the space for a greater investment stability.
Islamic finance companies certainly have profit creation and growth as their objectives. For which, they choose to invest in businesses based on their potential for growth and success. Thus, in the Islamic banking industry, each bank will invest in promising business ventures and attempt to out-perform its competitors, in order to attract more funds from its depositors. This will eventually result in a high return on investments both for the bank and the depositors. This is unlikely in a conventional bank, where depositors redeem returns on their deposits based on a pre-determined interest rate.
Russia has taken a quantum step to introduce Islamic banking and legalized it through legislation. Initially this to be introduced across four Muslim majority republics as part of pilot scheme in 1. Chechnya 2. Dagistan 3. Tatarstan 4. Bashkiria. These initiatives are gaining attention because some countries in the Middle East and Asia have shown interest in the Russian region.
Back in July 2023, Russian lower house of parliament passed a bill to introduce an experimental Islamic banking system in the country’s mostly Muslims regions and the pilot project has been started on 1st September,2023 and will last for two years. According to some estimates Muslims make up nearly 10 percent of Russia’s One hundred forty-three million population, with four areas in the country’s south having highest concentration. Russian regions of Chechnya gestant atrarisan and Bash quarter-san will have the option of conducting their financing in Islamic banking system. Russian Economists believe this step would help the country to build new economic links with Muslim countries across the Gulf and Asia. Islamic banking and finance system gaining enormous popularity in the world. Beside Muslim countries like Malaysia, Indonesia, Saudi Arabia, Iran, Qatar, Pakistan and Bangladesh there are number of countries which have Muslims in minorities have adopted Islamic banking system among them UK is on top and now Russia is moving towards Islamic banking system.
This effort to introduce Islamic banking system will further bring Russia and Muslims closer and efforts to isolate it from global community will receive set back. Madina Kalimulina, the executive secretary at the Russian Association of experts in Islamic Finance has said that this step would pave the way for Muslims in Russia to invest in Sharia Compliant Finance and would bring Muslims around the world closer with Russia. First Islamic Banking Company in Russia was established in 2010. MoU between the Bank of Russia and the Islamic Development Bank was signed in 2016. Islamic Finance Market is Russia is estimated US$ 7.7 billion.
It is healthy sign that Russia is giving importance to Islam and Muslims and this will pave the way for a new era of relations between Muslims and Russia. Muslim world should pay heed to transfer technology and to learn from the scientific development of Russia which is the need of the time.