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Islamic banking in Russia: help for millions of Muslims or a niche tool for investors
The first standard of Islamic banking may appear in Russia within a month, Chairman of the State Duma Committee on the Financial Market Anatoly Aksakov told Izvestia. However, while parliamentarians see partnership financing as a tool for attracting capital from friendly jurisdictions and an ethical alternative for believers, Oriental scholars doubt the ability of such products to become a mass alternative in the foreseeable future. All the details are in the Izvestia article.
Can Islamic banking become a real alternative to traditional services?
In Russia, the development of Islamic banking (partner financing) is regulated by an experiment extended until September 1, 2028. The participants are legal entities from the special register of the Bank of Russia: credit and non-credit financial organizations, as well as structures that meet the established requirements.
According to the NAFI study for 2025, 26% of citizens positively assess ethical financial instruments, and in the pilot regions (Tatarstan, Bashkiria, Dagestan, Chechnya) this figure reaches 44%, which indicates emerging but limited demand. Socially responsible investors and believers, for whom interest-bearing transactions contradict their inner beliefs, will benefit the most in the next three years.
The analysis of the Central Bank of the Russian Federation for the first quarter of 2026 confirms: Demand is formed mainly among the population seeking transparent risk-sharing mechanisms. Islamic instruments structure transactions so that profits are linked to real assets, which reduces the speculative burden on the market.
— For foreign capital, partner financing opens the way for investments in Russia. The introduction of standards and digitalization of tools, for example, with the help of CFA (digital financial assets), will become powerful incentives," said Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market.
The introduction of standards in accordance with international standards will make these tools understandable for foreign partners. The Association of Banks of Russia is currently engaged in this. The use of digital solutions will allow investors to flexibly act in the face of sanctions and infrastructure restrictions.
— Partner financing is able to attract investors who profess not only Islam, but also Orthodoxy. After all, for many Orthodox it is also important that their funds go to a useful cause and are not associated with interest payments and the exploitation of such human weaknesses as gambling or alcohol," the parliamentarian added.
Izvestia sent inquiries to the Ministry of Finance of the Russian Federation and the Central Bank. No responses had been received at the time of publication.
Islamic banking is a financial activity in accordance with Sharia law. Banks are not creditors, but investors: transactions with derivatives are not allowed, investments in the production of alcohol, tobacco, weapons, and gambling are prohibited. The Koran also prohibits the accrual of interest on loans and deposits.
Will this be an alternative for millions of Muslims in Russia
The current architecture of the pilot regime of Law No. 417-FZ restricts the experiment to four subjects of the federation (Tatarstan, Bashkiria, Dagestan, Chechnya), where, according to Rosstat data for 2025, about 12.5 million Muslims live. The share of partner instruments in the total volume of retail transactions of systemically important banks does not exceed 0.07%, which indicates their auxiliary nature.
Andrey Zhuravlev, a senior researcher at the Institute of Oriental Studies of the Russian Academy of Sciences, notes that in only two or three countries of the traditional spread of Islam, Islamic financial services account for more than half of the market, and in Russia, the mass consumer is unlikely to make them the main alternative in the foreseeable future. The Russian segment is currently focused mainly on attracting foreign capital, which is confirmed by the VEB deal.The Russian Federation in the amount of over 3.5 billion rubles. Domestic demand remains fragmented, and infrastructure constraints are slowing the penetration of new tools beyond the pilot zone.
An analysis of draft laws in the legislative support system shows that without tax neutrality, new schemes will not be able to compete with established credit programs. Monopolization of the market will continue until the regulator provides equal conditions for regional banks. Only the creation of open platforms for the issuance of sukuk (an Islamic financial certificate structured in accordance with Sharia norms prohibiting loan interest) will be able to prevent the concentration of capital in a narrow circle of issuers, VEB reported.
Will Islamic banking spread to the whole of Russia by 2030
The dynamics of regulatory regulation and technological adaptation indicate a gradual exit of partner financing beyond the pilot territories. According to the strategy of the Central Bank of the Russian Federation until 2030, it is planned to allocate up to 15% of regulatory resources to diversify debt instruments. Gazprombank estimates that the sukuk market in Russia may reach 2-3 trillion rubles by 2028, which requires the creation of a nationwide emission infrastructure.
Marklen Konurbaev, Professor at Moscow State University, notes: a fair and transparent system has no reason to stay in four regions, since an entrepreneur is looking for an honest partner, and the ethical model is gradually normalizing in the business environment. The first issues of digital financial assets, the volume of transactions with which has increased 3.5 times, according to the Moscow Stock Exchange in 2025, form the technical basis for the replication of partner schemes. Successful testing in Tatarstan sets a precedent for the inclusion of other subjects in a single legal field.
What does Islamic banking bring to depositors and borrowers in the long term
Partner financing is based on the principles of separation of risk and profit, linking to real assets and prohibiting speculative transactions. Theoretically, this can increase the financial system's resilience to shocks, but experts warn against overestimating expectations regarding inflation protection. According to Rosstat, the consumer price index in 2025 was 6.8%, and this indicator affected all financial instruments.
Certified Sharia Advisor Madina Kalimullina notes that crises and inflation are largely a consequence of the principles of the modern financial system, and partner financing is aimed at preventing such injustice. The Russian Association of Experts on Islamic Finance clarifies that Islamic banking does not automatically save from inflation, as this is a general economic factor. At the same time, the profitability of partner products in the pilot projects of the Central Bank of the Russian Federation ranged from 9 to 15% per annum in 2025-2026, which is comparable to traditional deposits.
Monopolization of the market: will Islamic banking increase competition
The Central Bank's "Review of the Banking Sector" for 2025 indicates that the top 10 credit institutions account for more than 71% of all banking assets in the country. This structure restricts competition and reduces the availability of services for small businesses.
Current data from pilot projects show that the main operators are systemically important banks. Partner products accounted for less than 0.6% of the total retail operations. About 25 projects have been launched in the pilot regions, and the share of alternative instruments in the total lending volume does not exceed 0.12%.
In order to have a real impact on the market structure, it is necessary not only to introduce standards, but also to create conditions for the participation of regional banks. According to the NAFI report, only 36% of Russians are ready to consider alternative financial products.
The role of standards in the development of the financial market
The AAOIF (Accounting and Auditing Organization for Islamic Financial Institutions, an international non—profit organization that develops standards for Islamic financial institutions) standards are a key element of harmonization. According to the organization's data for 2025, they have been adopted in 28 jurisdictions, and the association's members include more than 150 regulators and financial institutions from 45 countries.
The integration of Russian instruments into the AAOIFI system creates prerequisites for attracting capital from the countries of the Islamic world, where the total assets of Islamic finance, according to CIBAFI (General Council for Islamic Banks and Financial Institutions, an international non—profit organization founded by the Islamic Development Bank and a number of leading Islamic financial institutions), reached $5.3 trillion by the end of 2025. and it will amount to $9 trillion by 2030. At the same time, over 70% is accounted for by direct Islamic financing, about 15% by investment funds, and the rest by takaful (an Islamic insurance system based on a mechanism for distributing profits and losses between participants and the operator based on Sharia norms).
The opening of the AAOIFI representative office in Kazan in December 2025 was an important step in adapting international practices. However, for the full implementation of standards, not only regulatory harmonization is required, but also personnel training — as of 2026, less than 50 Sharia audit specialists have been certified in Russia, which creates a shortage when scaling the industry.
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