Oleg Ganeev: ‘We are seeing a steady increase in demand for Islamic finance products’
Senior Vice President of Sberbank Oleg Ganeev assessed the results of KazanForum 2023 for Realnoe Vremya and shared his view on the development of Islamic finance products in Russia.
This year, the Russia — Islamic World: KazanForum 2023 International Economic Forum, in accordance with the decree of the president of Russia, received federal status. Given the current scale of the event, what was its role in the development of Islamic finance in Russia?
This year we have seen a significant increase in the number of participants and speakers of the forum from all over the world. I think that in a few months we will get the first results of the event in the form of real business cases.
KazanForum has transformed over the years into a stable platform for cooperation with representatives of business circles of countries, including the Organization of Islamic Cooperation, and acts as the main springboard for building mutually beneficial economic relations based on partnership.
What events of the forum did you participate in and which ones you can call the most significant as a result?
First of all, we have integrated our own Russian Islamic Economic Forum into Sberbank's business programme, which we have traditionally held at various regional venues for 5 years. And in the current conditions, this synergy of the two largest business platforms with a focus on the development of branches of the Islamic economy is very important. The forum guests attended an educational course on the basics of Islamic finance, which took place within the framework of RIEF, as well as two panel sessions on the role of the bank in the development of this area and the importance of partner finance in the light of the ESG agenda.
Last year, Sber opened the first office of partner financing in Tatarstan. How do you assess the demand for services according to the canons of Sharia?
Today, we are seeing a steady increase in demand for Islamic finance products from the retail and corporate segments. Every month, statistics show an increase in the portfolio of products that comply with Sharia law. Since the beginning of the year, more than 800 retail accounts worth more than 73 million rubles have been opened, including several dozen accounts in yuan and dirhams.
With the growing demand, are there plans to open additional partner financing offices?
Certainly, we plan to open new partner financing offices. First of all, we consider regions with a high proportion of the Muslim population, and these are the Republic of Bashkortostan, Chechen Republic, Republic of Dagestan, and other republics of the North Caucasus, as well as a special focus on Moscow.
What Islamic finance products are available at the moment?
Currently, in the office in Kazan, customers can open a current account that complies with Sharia law and is intended for storing funds. Trust management products are available, as well as BPIF (exchange-traded mutual investment fund — ed.) that meets Sharia standards.
Corporate clients can use the service of Islamic cash and settlement services, the product of ijara (long-term lease with the right of subsequent redemption, in accordance with Sharia law). Card products are available, as well as coins, bullion and an impersonal metal account.
What other financial products can be added to this segment in the future, what are the plans for the development of the direction?
We plan to expand the range of our services, first of all, in the future with one of the most popular products — Islamic mortgage.
Can banking services provided according to the canons of Sharia be available to businesses and individuals who are not Muslims?
Certainly. Partner finance is positioned in the world as a banking system not only for Muslims, but for everyone who follows certain ethical principles. It is enough to note that Ireland is one of the world leaders in the volume of issuance of Islamic bonds, and in the UK, separate provisions have been introduced at the legislative level regulating this area. An example is also Malaysia, where the bulk of Islamic financing is used by non-Islamic clients. The Islamic banking system is based on restrictions on the financing of any activity that leads to violations of Sharia standards, social justice and unjustified profit.
It is worth emphasising that Islamic finance fully meets the criteria of the ESG agenda, especially in terms of social responsibility, fairness and corporate governance (social and governance). Here we can say that the scope of the tasks of financial institutions is wider than making a profit.
This year, the State Duma of the Russian Federation plans to adopt a law on Islamic financing. In your opinion, will this and other steps taken lead to that this area will become an attribute of everyday financial activity from some exotic? And what are the growth points?
We see several points of development of Islamic finance in Russia: firstly, it is the potential of retail segment. As I've said above, any client can use Islamic products, regardless of their religion, since partner financing is based on the principles of achieving universal social welfare. Secondly, it is the financing of international transactions with a number of countries that require structuring according to the conditions of Islamic financing. And the third, it is the development of halal products business, and we also see great prospects in this niche. The law will create equal conditions for all customers and opens access to a full shelf of products and services.