Islamic banking will grow substantially in Commonwealth of Independent States (CIS) in the next five years from a low base, driven by government initiatives to boost the sector, Moody’s Investors Service said in a new report on Thursday.
“Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are set to lead this expansion of Islamic banking,” said Svetlana Pavlova, assistant vice president, analyst at Moody’s.
“These countries have large Muslim populations, and are notable for their governments’ commitment and progress in establishing better legal and regulatory infrastructure for Islamic finance.”
Kazakhstan’s government aims to boost the share of Islamic banking assets to 3 per cent of total banking assets in the country by 2025 from the current 0.2 per cent. In Kyrgyzstan, the National Bank of the Kyrgyz Republic plans to grow the share of Islamic finance in total banking system assets to 5 per cent by 2021 from the current 1.4 per cent.
In Tajikistan, a law to lay out a foundation for Islamic banking took effect in 2014 and since then, the central bank and the government have been working together to amend other existing laws and regulations to facilitate the development of the sector.
Uzbekistan is developing a legislation to govern Islamic finance with support from Jeddah-based Islamic Development Bank (IDB), which has provided more than $7 billion (Dh25.7bn) in funds to CIS countries, of which more than half has gone to Kazakhstan and Uzbekistan.
Russia, with a Muslim population of close to 15 million, has the lowest growth potential among CIS countries due to lack of an Islamic bank as well as initiatives to expand Sharia finance, according to the report.
But some individual banks in Russia are seeking ways to meet potential demand for Shariah-compliant products and services under existing laws.
Sberbank, the largest commercial bank by assets in Russia, is looking to offer Islamic services to customers, starting with businesses and launched an Islamic payment application in 2019. Bank AK Bars, the largest bank in the Republic of Tatarstan (Russia), in 2019 introduced a pilot Islamic mortgage product.
The report also points out regulatory hurdles in the growth of Islamic banking in CIS countries. For example, asset purchases and resales, which are part of many standard Islamic finance transactions, are subject to value-added taxes unless authorities grant an exemption.
In some countries, Islamic banks’ deposits are not covered by state deposit insurance systems. Further, Islamic banks cannot use central banks’ conventional liquidity and funding facilities because they all bear interest.
“These disadvantages mean Islamic banks have higher funding and operating costs compared with mainstream lenders,” the report says.
In addition, the sector's growth is impeded by the absence of accommodating regulations. For example, Kazakhstan and several other CIS jurisdictions do not allow conventional banks to operate Islamic windows – divisions established within conventional banks to provide Shariah-compliant services.
Weak public awareness is another impediment to Islamic banking growth in CIS countries.
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The specs
- Engine: 3.9-litre twin-turbo V8
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The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at.
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.
How Islam's view of posthumous transplant surgery changed
Transplants from the deceased have been carried out in hospitals across the globe for decades, but in some countries in the Middle East, including the UAE, the practise was banned until relatively recently.
Opinion has been divided as to whether organ donations from a deceased person is permissible in Islam.
The body is viewed as sacred, during and after death, thus prohibiting cremation and tattoos.
One school of thought viewed the removal of organs after death as equally impermissible.
That view has largely changed, and among scholars and indeed many in society, to be seen as permissible to save another life.
