Islamic banking in Russia for the first time

Moscow: Russia is going to start Islamic banking at state level for the first time in its history.

According to Arab media reports, there were Islamic financial institutes in Russia—a country with a population of about 2.5 million Muslims—but for the first time, Islamic banking is going to be formally started at the government level.

On August 4, 2023, Russian President Vladimir Putin signed a memorandum to introduce the Islamic banking system in the country.

According to reports, Islamic banking is starting in Russia from today (Friday). Under the pilot program, the duration of Islamic banking will be two years for now.

The reports also told that Islamic banking will initially be implemented in Tatarstan, Bashkortostan, Chechnya and Dagestan.

Russia has also formally approved the introduction of Islamic banking by legislation.

Difference between Islamic and conventional banking

The most basic difference between Islamic banking and conventional banking is that Islamic banking is governed by the laws laid down in the Sharia in which interest rates are not paid on the money deposited in the bank as provided in conventional banking.

Apart from this, the rate of profit and loss is based on partnership in Islamic banking. While in conventional banking, the profit is provided to the customer in the form of interest rate in every case.

In addition, Islamic banking does not provide support for harmful factors such as alcohol, tobacco and gambling.