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Russia sees development of Islamic banking through Azerbaijan

Prospects of the Development of Islamic banking

Share on Facebook April 18, 2015, Reporter : Trend, Reader : 555

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Baku, Azerbaijan, Apr. 18 By Anvar Mammadov – Trend: Russia hopes to learn from the experience of Azerbaijan in the field of Islamic banking, scientific director of the Gaidar Institute for Economic Policy Sergey Drobyshevsky told Trend Apr.17 within the framework of the conference “Prospects of the Development of Islamic banking on the post-Soviet space” held in Baku in the Khazar University.

Drobyshevsky said that the presence of a subsidiary of the International Bank of Azerbaijan (IBA) in Russia must contribute to this. In addition, it will be easier to work in Russia for the Azerbaijani banks and businessmen than the Malaysian specialists of that sphere, where Islamic banking is also developed, according to him. “There is no language barrier between Azerbaijan and Russia, they have similar culture and a lot in common,” said Drobyshevsky.

He also touched upon the prospects for the development of Islamic banking in Russia. “The more financial instruments the market has, the more differentiated they are, the more effectively it helps investors to diversify their risks, according to the theory of finance,” he said. “These are new possibilities and their implementation does not depend on the state - it depends on the participants of the market themselves and potential customers of Islamic banking.”

Islamic banking can claim only 5 percent of the Russian financial market during 5-10 years, but “I think that the main thing is to start the process,” said Drobyshevsky.

Trend earlier reported that IBA Board decided to open an alternative banking department in the subsidiary bank in Moscow. This department will work within the framework of the IBA-Moscow Bank and develop Islamic financing.

IBA is ready to take responsibility for the promotion of Islamic banking in the CIS countries in accordance with the initiative of the CIS Financial & Banking Council, consisting in IBA`s determining as a common development bank of Islamic finance in the region.

The bank has all the prerequisites to build a bridge between Asia and the Middle East, as well as between the CIS and the Gulf countries, Director of the Islamic Banking Department of IBA Behnam Gurbanzade told Trend earlier.

IBA started rendering Islamic banking services in 2003, becoming the first in the country's banking market. The bank has been providing services in this sphere with the resources attracted from the Islamic Development Bank group.

In 2013, a consortium of Salans, KPMG, Pinsent Masons and Dar al Shariah companies was assisting IBA in the creation of a specialized structure for rendering products and services of Islamic banking.

The IBA was founded in 1992 as the successor of the Vnesheconombank's Azerbaijani branch. The IBA holds the dominating position in the country's banking sector. The bank's main shareholder is the Azerbaijani government which owns a 50.2 percent share. The remaining shares of the bank are owned by private individuals and legal entities.

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