Risk partners – Newspaper Kommersant No. 175 (7376) of 09/22/2022

The annual banking forum under the auspices of the ADB, which began to work in Kazan, opened with a panel discussion “Partner Finance: Status and Development Prospects”. That is, as soon as the forum, which traditionally took place in Sochi, moved to the capital of Tatarstan, Islamic banking became the first topic for discussion. On the same day, a draft law was submitted to the State Duma regulating the conduct of an experiment to develop “the necessary conditions for the implementation of partner financing activities.” It should help attract investment from the member countries of the Organization of Islamic Cooperation, which is especially important in the face of growing sanctions pressure.

Attempts to organize Islamic banking in Russia have been made repeatedly. Over the past decade, individual projects have been implemented based on partnership funding models. At the same time, the development of the market requires an increase in “the quality of its regulation, the elimination of existing legal barriers,” the explanatory note notes. The deterrent was the desire of banks to engage in this business, although they are prohibited from trading operations, on the basis of which partnership financing is largely built.

It seemed that the problem was solved this summer. According to the developed draft law “On Partner Financing Activities”, this type of activity will have to be carried out by a special partner financing organization (OPF). It was assumed that the State Duma would consider it in the autumn. However, the draft law, introduced on September 21, does not contain a word about OPF, but it provides that credit organizations can engage in Islamic banking. It states that banks engaged in trading for partner financing purposes do not violate the law prohibiting them from doing so, and property acquired for this purpose is accounted for separately from everything else.

In fact, the banks have lobbied for such a right. And it is possible that this was done on the grounds that a large Arab or Asian bank would rather agree to become a partner of a large Russian credit institution than one with no history of OPF. However, according to experts, such an assumption looks disputable, since in the case of a Russian bank there are many reputational risks.

He gives and takes money at interest, can serve companies involved in the trade or production of alcohol. And this, in terms of Islamic counterparties, may turn out to be unacceptable types of business, even if they are accounted for separately from everything related to partner financing. And for banks to resolve these issues, it may take more than two years, which is designed for the experiment.