Midhat Shagiakhmetov: the adopted law is an important step in the development of partner financing
The implementation of a two-year experiment to create the necessary conditions for the implementation of partner financing activities in certain regions of the Russian Federation was discussed at a briefing in the Cabinet of Ministers of the Republic of Tatarstan. The experiment will start on September 1, 2023 on the territory of 4 regions of the country, including Tatarstan.
The briefing was attended by deputies of the State Duma, representatives of educational institutions, religious, public and financial institutions.
One of the key speakers was the Deputy Prime Minister - Minister of Economy of the Republic of Tatarstan Midhat Shagiakhmetov. He noted that the adopted law is an important step in the development of partner financing.
In Tatarstan, work in the field of partner finance has been carried out for more than 15 years, successful experience has been accumulated in the implementation of individual projects based on the principles of Islamic finance. Today there are a number of organizations in the republic that provide services in the field of partner finance:
- obtaining consumer and business financing;
- housing financing on installment terms;
- leasing in accordance with the requirements of Sharia;
- investment of funds through investment agreements and mutual funds.
The speaker stressed that the purposeful development of this segment of the financial market requires an increase in the consistency and quality of its regulation, the elimination of existing legal barriers, as well as the alignment of the conditions for the implementation of partner and traditional finance.
"The main objectives of the experiment are to identify problems and further eliminate existing legal barriers, to develop an optimal regulatory mechanism to create favorable legal conditions," Midhat Shagiakhmetov said.
The Minister of Economy indicated that the solution of a number of legal barriers and issues of equalizing conditions for partner finance in comparison with traditional ones are already provided for in the adopted law.
Thus, according to the law on banks and banking activities, credit organizations were prohibited from engaging in trading operations that underlie the products of Islamic banking. This forced us to look for complex solutions, which in turn increased the cost of the product and the timing of its introduction to the market, and this directly affects the cost for customers. As a result, customers who wanted to receive Islamic financing products refused them due to their lack of competitiveness.
"Within the framework of the law, this point has been taken into account, now banks will be able to offer customers products on similar terms with conventional banking services, but fully meeting the requirements of Islamic banking," the Deputy Prime Minister of the Economy of the Republic of Tatarstan said.
Another important issue raised by market participants was access to state support measures for recipients of partner financial services. When using partner financing instruments, it was possible to use maternity capital only after the child reached the age of three. Clients of Islamic financial organizations could not receive payments under a mortgage loan to a borrower who had a third or subsequent child. The solution has been found and included in the law.
The Minister of Economy of Tatarstan stressed the importance of adaptation and other support measures during the experiment. He indicated that the issue of taxation of Islamic finance has been settled in the current experimental format. The Ministry of Finance of the Russian Federation and the Federal Tax Service have provided relevant explanations on VAT and receipt of tax deductions for the period of the experiment.
Midhat Shagiakhmetov said that an appropriate action plan has been formed in Tatarstan to implement the tasks announced in the report. One of the directions of the plan is to use the potential of the halal industry as an important channel for piloting partner finance products in the real sector of the economy.
The next direction of the plan is to increase financial literacy of the population, training of highly qualified personnel and educational work. To implement these tasks, specialized educational centers are working in the republic - the master's program "Islamic Finance" has been opened at Kazan Federal University and separate educational courses have been organized, the Russian Center for Islamic Economics and Finance has been established on the basis of the Russian Islamic Institute.
In conclusion, the speaker indicated that the effectiveness of the pilot in the framework of the experiment will be evaluated by improving the consistency and quality of regulation, eliminating existing legal barriers to develop an optimal regulatory mechanism and creating favorable legal conditions for the sphere of partner finance in our country. This will make it possible to attract existing and new participants to participate, as a result of the experiment, sufficient experience will be gained to fine-tune regulation.
"The partner finance sector in our country has great potential. Much has already been done to realize this potential, but much remains to be done. I hope that we will go this way quickly enough and partner finance will take its rightful place in the Russian financial market," the Deputy Prime Minister of the Economy of the Republic of Tatarstan summed up his speech.