Socially oriented model of Islamic banking

Interviewed by the editor-in-chief of Vestnik Kavkaza, Maria Sidelnikova
Socially oriented model of Islamic banking

Advisor to the Deputy Chairman of the Federation Council, the diplomat Andrei Baklanov, spoke in the studio of Vestnik Kavkaza about the work of the legislature on a project to introduce elements of Islamic banking. The expert believes that this measure will help to bring products from Islamic countries, as well as improve the financial structure of the country, reducing social tensions.


- Andrey Glebovich, one of the most important components of the Arab world is the system of Islamic finance. Many countries are already working with this system. Do we have anything in the making along this line?

- A lot of things are being done. I am, personally, very pleased with myself that I was involved in this work, in the working group that is working hard to make the appropriate changes to the current legislation that would allow Islamic products to work. The point is not in adaptation of legislation to Islamic products, the main thing is why it is attractive. If we take the origins of Russian business activities, 19th century, 18th century, 17th century, the sources themselves, then at that time, the moral and ethical side, how it was organized, is very similar to the moral and ethical components of what is now called Islamic banking.  In contrast to the currently existing western model prevailing in almost all countries, it provides money at no interest, and cares only about bringing it back, the Islamic model divides responsibility, and here it is necessary to choose a good partner, so that the results could be successful. That means that connection with production and the outcome is exactly what we need. And the Islamic model actually - I just need to take my hat off to Muslims – inside their confession they reserved the only thing that was peculiar in the sense of decency, in the sense of orientation to not squeezing money in any way, but to production of what was typical for the origins of our business in Russia. Other segments of our business lost that direction, and then came the Western system - the one we see today, and from which we suffer - which annoys people and leads to periodic crises. If we take a correct moral and ethical system as a basis, part of which is what is known as Islamic banking, it would be much better to operate all of the financial and economic structure of a particular state.

In the economies of many Islamic countries a very large segment is occupied by banks, which operate in the West, so they, too, must work on the implementation of these methods of orientation to the production of financial and economic activity. And of course, there is a definite struggle everywhere, because some people want a simple secure life. When a banker is not very interested in how it will all end, or how the project will affect people. But the future is, of course, for the socially-oriented model. One of these models is an Islamic bank.

- And from Western countries, who is working with this system? Are we relying on someone else's experience, or going our own way?

- The introduction of Islamic banking has two aspects: it is the attraction of products from Islamic countries and the second aspect is that it's part of the general improvement of the financial structure of our country. In particular, the United Kingdom and some other countries are moving quite quickly in this direction. But they are considering it as some segment of their system, focused on those who want to deal with this. We disagree with them. That means that the obligation of the banker should be taken as a basis, we had such precedents. For example, there were Naidenovs, a family of Moscow businessmen. In 1917, when the banks were nationalized, including a bank which belonged to the family ... It was force majeure, the banks were nationalized, and so on. But still, Naidenov, because of his commitment and moral qualities, mobilized all that he had - any money left - and distributed to all those whose money had been nationalized, he compensated for the losses they had suffered. That's like, probably, how a banker should behave if he is in social solidarity and conscience solidarity with the people he works together with.

We need to educate people, it is necessary to do this first of all, we need to somehow make such cases known, and secondly we need to replicate the positive, rather than passively accept any schemes that come from the West. If we all want to live well, we must be guided by the ethical principles which are recorded in the Qur'an, and are required for those who follow Islamic banking.

- Andrey Glebovich, what products do you think are the most interesting?

- The principle itself is important. Perhaps most importantly, is for production and the banks to be one collective. By the way, the same methodological problems we have now between science and industry, we also have many intermediaries between science and industry. Muslim countries, by the way, now they are also engaged in it, trying to bring together production and science, and so we are working together with the Islamic world on this project. We annually gather the Kazan summit, and this year too. We are holding it in the middle of June. And there is what we talked about, it will be an integral part of the work: Islamic banking, the transition to a more appropriate and effective system of banking.

- When will these measures actually develop, and in what year will the system be operational?

- The first draft is ready, I saw it, now the validation process is underway, so I think it's about a year and a half before the first signs in terms of the possible introduction of some changes that will make better use of these tools.

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