“A Halal mortgage is attractive not only for Muslims”
Russians obtained over 140 billion rubles in banks in 2015 for self-builds. Today about 90% of self-build offers consist of loanings from banks and some 80% of home loans are gotten in state preferential programs.
So the interest in a self-build home loan is huge enough. However, in the basic quantity of home loans, this property sector holds simply 5%, kept in mind Tatarstan business owner, owner of Khan’s House Ilyas Gimadov. The designer started the task of a Halal self-build home loan together with a number of business:
“The absence of preferential programmes for second-hand homes scotches the realty market too. For instance, our clients need to sell a flat but they can’t because it is more profitable for everybody to take out a mortgage for a new house. Second-hand housing is stalled — and this chain doesn’t work. Due to this, together with another seven companies of this kind we are working on a project of an alternative mortgage or, more precisely, a loan paid in instalments, which is some analogue of a Halal loan. Developers of blocks of flats once worked in this scheme. While we offer our option for self-builds. A buyer can pay 50% of the home value. The other 50% are paid in instalments for 5-8 years. The loan is interest free, however, the payment will depend on the price of a square metre in the market, that’s to say, an independent estimate will monitor self-build prices every quarter and fix a market price for a square metre of the facility,” Gimadov said.
The authors of the task strategy to provide the Halal home loan for self-builds at KazanSummit online forum this May.
“We believe that it is an interesting offer for the market in general. Moreover, amid rising mortgage rates. We call this product an analogue of the Islamic mortgage but it suits not only Muslims but also any buyer of any religion. Now the financial product is authorised in the Ministry of Justice,” the business owner included.
“To be considered”
Specialists of the monetary market at the minute are really cautious about the potential customers of the task. Economist, Director General of BusinessDrom analytic company Pavel Samiyev believes that now it is difficult to assess the future of the Halal home loan due to the fact that the confirmation concept is uncertain:
“This moment hasn’t been elaborated from a perspective of legislation and regulations. This is why there can be difficulties with its execution in the future. There is some demand for this bank product, especially in some Russian regions. But we need to understand that it is uncertain because there are not legislative standards. Now it is hard to assess the prospects and, moreover, the scale and volumes in monetary terms.”
The State Duma is preparing to adopt a law on a two-year experiment to launch Islamic banking in Dagestan, Chechnya, Bashkortostan and Tatarstan (embraced at the very first hearing). The individuals in the brand-new legal program will have the ability to provide money to legal entities and natural individuals without interest, financing customers by signing purchase and sale arrangements (consisting of property) on the condition of payment in instalment. It is thought about that the areas associated with the experiment will be devoid of a variety of operations of the Organisation of Partnership Financing from worth included tax and earnings tax.
A brand-new Islamic home loan item existed at KazanSummit as early as summertime of 2021 in Tatarstan:
“We have been implementing the Islamic Mortgage for two years to buy homes and land parcels according to Sharia norms. We see demand for this programme among Russians, which is confirmed by results of marketing research,” journalism service of Ak Bars Bank informed Realnoe Vremya.
“Understanding the significance of the area, we try to keep and expand the geographical footprint of the Islamic Mortgage in big Russian cities. We hope that those changes that happen in legislation will make Islamic finance more affordable and popular for clients.”
“Why we see a pause in the promotion of Muslim finance in Russia”
Head of BCF bank’s Analytic Department Maxim Osadchy kept in mind that there are from 15 to 25 million Muslims in Russia, according to various quotes, for that reason the huge advancement capacity of the Islamic home loan in Russia doesn’t raise doubts:
“On the one hand, there are a lot of Muslims. On the other hand, the existing types of loans in Russia, including the mortgage, obviously contradict Islamic that prohibits interest. Bringing financial instruments offered to Muslims in accordance with Sharia laws, at least on territories with a significant share of the Muslim population, including in Tatarstan, is an important task. The idea of Muslim finance isn’t new. It periodically appeared and disappeared in Russia, but we “didn’t have the time” to make it genuine. Finally, right away after the start of the unique military operation, amidst the unexpectedly increased sanctions pressure and as an as a result an “eastward turn,” the concept of Muslim banking ended up being topical like never ever in the past.” The concept of Muslim financing was resuscitated according to Ramzan Kadyrov’s effort, consisting of the Muslim home loan. Seemingly, this item will remain in need from advocates of Islam. But this needs rather considerable modifications in legislation. Meanwhile, the Duma doesn’t have law-makers that have experience of dealing with Sharia laws in financing. This is an extremely particular sphere due to the fact that the compatibility of Russian legislation and Sharia requirements in Muslim financing takes much time.
Maxim Osadchy believes that such an instrument would help increasing the variety of home loans in areas with a Muslim population:
“Let’s take, Chechnya, for instance. The number of home loans granted to natural persons with the entitlement to equity construction agreements as security reached 57,000 in Russia in general in December 2022. Chechnya had just 46 loans in this number! The programme of Halal lending, first of all, is aimed at Muslim regions and this is why I wait for some activity in this area, firstly, from regional banks. But there is a problem too: Chechnya has no bank registered in this republic.”
“All entrepreneurs are waiting for it”
President of Russia’s Association of Muslim Entrepreneurs Aydar Shagimardanov validates that the need for Islamic financing is high enough:
According to him, the operate in this location has actually been provided for a long period of time. The problem has actually been consistently talked about in the State Duma.
“But nothing has changed at the moment. We don’t see serious changes in legislative standards. Tatarstan has several financial organisations and construction companies that launch Halal financial products. Now the Self-Build Association is actively promoting the topic of the Islamic mortgage. And nobody impedes any construction company from offering Halal instalments. This depends on the desire of the construction company itself. There is going to be colossal demand for such a product. There is already demand. This year Sberbank plans to open Islamic lending. We are daily discussing this with it and waiting for such a possibility to appear in the next few months. All entrepreneurs are waiting for this,” Shagimardanov kept in mind.
“A political will is needed”
Alexander Razuvayev, director of Alpari’s Analytic Department believes that Islamic funding will start deal with the start of the pilot task of Islamic financing:
“Given that Russia is now significantly cut off from foreign financing, Islamic financiers are in a more favourable situation. Western sanctions aren’t a command for them. I don’t rule out that banks will come to Russia including from Turkey, Azerbaijan, the Near East that will start introducing Islamic financing more actively but with the main condition — legislation.”
Another thing, according to him, is that to promote the item throughout Russia, it will be needed to concur with a few of the huge retail banks, “But why not, an agreement can be reached.”
The specialist said that presently business owners from Baku were thinking about the possibility of producing a monetary business in Moscow that would handle, to start with, Islamic financing and bring in money from Islamic nations.
Milyausha Kashafutdinova
Tatarstan
