Russia’s Sberbank to launch Islamic banking

At a shareholder’s meeting on May 29, Sberbank’s CEO, Herman Gref, unveiled plans to introduce Islamic banking in Muslim areas across Russia. With a majority Muslim population, the Russian republic of Tatarstan is considered as key in the strategy.

As Russia pivots from west to east, the move hopes to attract morebusiness and capital from Arab countries. “We will actively promote the development of such a tool as Islamic banking, as it opens up a good opportunity to work with international partners amid sanctions,” Gref is reported as saying during the meeting.

Given the rising demand for Islamic banking tools from a growing Muslim population that resides in Russia, investors from the Gulf States have shown their willingness to set up hedge funds in order to facilitate the implementation. The details of how Moscow will incorporate the Islamic financial framework in conjunction with its conventional system are yet to be revealed.

According to Russian media group, Vesti Finance, if Islamic banking is also rolled out in Central Asia, Islamic financial assets within the region could reach $24bn within just three years.

Sberbank is one of the most profitable banks in the region and accounts for two thirds of revenue earned by the banking sector in Russia. Despite its prominence in the industry, the firm struggled considerably in 2014, with profit losses amounting to 19 percent. The bank’s performance is attributed to an unfavourable economic environment, which stems from the dramatic fall of the rouble’s value, coupled with Western sanctions. “We just made it through one of the most difficult years since 2008,” Herman Gref said during the meeting. “But, it turns out that we were better prepared for this crisis than we were in 2008.”

Islamic banking is based on sharia law and Islamic economics, which rest heavily on the principle that loss and profit are shared and prohibits the collection of interest. Moreover, the provision of company shares replaces the percentage basis, again contributing to the idea that the bank shares risks with the borrower. Islamic banks are barred from financing businesses, projects and trade that are involved in sharia-forbidden activities, such as alcohol and gambling.

(World Finance / 01 June 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

West Africa an Emerging Market of Islamic Finance

Dakar - There is an ample scope of Islamic banking and finance in western African region and Senegal can play a vital role in elevating it through the countries. It was spoken by Muhammad Zubair Mughal, Chief Executive Officer AlHuda Centre of Islamic Banking and Economics (CIBE) while attending an international seminar on Takaful that was held at Dakar Senegal. Delegates from Senegal, Mali, Ivory Coast, Mauritania, Guinea and other neighboring countries of western Africa participated in the stated seminar.

Mr. Mughal further added that Senegal situated in Western Africa has a population of 14 million carrying 95% Muslim population. Due to Muslim tendency, it has growing demand for Islamic financial products. If Senegal pursues the marketability of Islamic finance it will directly impact rest of the stakeholders of western Africa that wholly depend upon the expertise of Senegal. Senegal ensuring its advisory to other western African countries through central bank (UEMOA) that is comprised of (08) eight member countries i.e. Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

Promoting Islamic banking and finance means direct growth of Shariah compliant banking and finance in Senegal, he exclaimed that it is worth noticing that Senegal with very less potential technical capacity, runs a full fledge Islamic bank, Islamic microfinance and Sukuk organizations that is appreciable. Senegal can attract banks and other Islamic banking and finance institutions from countries like Middle East and Malaysia to open their branches in Senegal or to start up new projects over there. Through this, Senegal can be succeeded to attract ample FDI in the country that will not only increase Islamic banking and finance industry but also prove to be the source of prominent progress in business and other pertinent fields. It can serve as a healing power for the poor living in western Africa through Islamic microfinance further leading to poverty reduction and socio economic progress.

Mr. Mughal added that AlHuda CIBE has chalked down a robust strategy to promote Islamic banking and finance in West African countries so that the fruits of shariah compliance could reach to the region. It is how these countries can start progressing towards development and come out of the box of under development. He announced a special wing for French speaking countries that will be situated in Dubai. It is how shariah compliance could reach to French people and they could take maximum benefit out of it and Islamic banking and finance could also reach to its sublime a as a good number of Muslim population lives in French speaking countries. He made announcement that AlHuda CIBE with its strategic partner AAMAS Africa will organize an international conference on Islamic banking and finance in Dakar by December 2015.

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About AlHuda CIBE
AlHuda Center of Islamic Banking and Islamic Economics (CIBE) is a well recognized name in Islamic banking and finance industry for research, advisory and capacity building over the last ten years. The prime goal has always been to remain stick to the commitments and provide state-of-the-art Advisory Consultancy and Education through various well recognized modes viz. Islamic Financial Product Development, Shariah Advisory, Trainings Workshops, and Islamic Microfinance and Takaful Consultancies etc. Side by side through our distinguished, generally acceptable and known Publications in Islamic Banking and Finance.

We are dedicated to serve the community as a unique institution providing Services not only in UAE/Pakistan but all over the world. We have so far served in more than 25 Countries for the development of Islamic Banking and Finance industry so far.

(Zawya / 01 Jun 2015)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Consultant-Speaker-Motivator: www.ahmad-sanusi-husain.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com