Russian State Duma is preparing amendments removing the obstacles to the implementation of Islamic banking in Russia. According to RBC who cite newspaper Izvestia, the corresponding changes that will chiefly concern Banks and Banking Act are engineered by the deputy chairman of the financial market committee of the Russian State Duma Dmitry Saveliev.

Russia Muftis Council brought up this issue as early as in 2008 in an executive summary to the Administration of the then President Medvedev. The summary included a list of crisis response measures involving the mechanisms of Islamic banking.

The author of today's initiative Dmitry Saveliev proposes to abolish the prohibition of commercial activities for banks. The current law forbids banks to engage in industrial and commercial activities except for the cases when it's required for internal purposes (e.g., it is allowed to sell property during asset disposals, etc).

Classical Islamic banks enter working agreements with their clients, thus becoming their partners in certain deals. For example, a bank finances a company and gets a specific part of the company's income within an agreed-upon time limit. In retail business, financing is substituted by buy and sell deals: the bank sells the customer the needed commodity (a car or an apartment) on installments, for an above-market price.

There are no deposits in Islamic banking, too. Instead, clients may entrust their money to the bank and share the income on investments.

It is the first time that an initiative concerning Islamic banking appears in Russian State Duma. According to Saveliev, world's Islamic banking assets amount to US$1-2 trillion. "Of all Russia's regions, Tatarstan traditionally showed most interest in Islamic banking, being influenced by their colleagues from Malaysia. So the prospects are quite real," said the MP.

In August of last year, the Association of Russian Banks addressed the Central Bank of the Russian Federation, citing the need to make amendments to the legislation to let the Islamic banks work in Russia.

Deputy chairman of the Central Bank of Russia Aleksandr Troshin said that the financial regulator is optimistic about this idea. "The introduction of the Islamic banks will benefit our banking system because banks abiding by religious principles seriously increase confidence in them in the eyes of believers," said Troshin, who was appointed as the CB deputy chairman on relations with the parliament and government this January.