Islamic fund managers and investors in the Middle East should turn their attention to more than 65 million Muslims in Russia and the Commonwealth of Independent States (CIS) while the region's banks investigate the potential of offering Shariah-compliant products for overseas investors and local consumers, said a senior official of Amanie Islamic Finance consultancy.
Mark Smyth, Executive Director at Dubai-based Amanie Islamic Finance Consultancy and Education (AIFCE), highlighted the huge potential in Russia as well as the other CIS countries such as Kazakhstan.
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There is no doubt of the potential for Islamic finance in Russia and the CIS countries, but the major stumbling block is the absence of enabling legislation and a regulatory framework to facilitate Islamic financial products such as Murabaha, Ijara and sukuk.
These sentiments could not have been articulated better at the Moscow Forum on Islamic Finance & Investments which was held in the Russian capital last Thursday and attended by a host of local and international participants including Ali Hassan Jaafar, the Saudi Arabian Ambassador to Russia. The European Union’s largest and strongest economy, Germany, is finally edging toward facilitating Islamic finance in its jurisdiction. Germany has a Muslim population of 4.3 million, the second largest Muslim population in the EU after France with 5.5 million. Reports from Germany stress that the country’s banking regulator, the Federal Financial Services Authority (BaFin), has issued a limited banking license to Kuveyt Turk Participation Bank, one of Turkey’s four so-called participation (Islamic) banks. Kuveyt Turk is majority-owned (62 percent) by Kuwait Finance House, one of the largest Islamic banks in the world in terms of capital and assets. The Islamic Development Bank (IDB) also has a 9 percent stake in Kuveyt Turk Participation Bank.
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