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On 07/18/2023, the founder of L&P made a comment for Kommersant, in which he explained the contradictions between the current Russian legislation on banks and banking activities and the draft laws on the so-called “Islamic banking” adopted by the Russian parliament in the 2nd reading on the experiment on implementation in four regions of Russia (Bashkiria, Dagestan, Tatarstan and Chechnya) of partner financing (“Islamic banking”) on 18/07/2023.


Alexander Linnikov said: “According to the current law on banks and banking activities, credit organizations carry out lending, i.e. the activity of providing funds for the use of borrowers on terms of urgency, repayment and payment. Thus, lending without charging interest contradicts the very foundations of banking legislation. In turn, the principle of paying for a loan contradicts Islamic law, which prohibits lending money. I believe that the provision on the submission of loans without charging interest was excluded from the original text of the bill in an attempt to mitigate the conflict between Russian law and the norms of Islamic law. In return, a kind of “payment by instalments” is offered. In this way, in the experimental version of Islamic banking, an increase in the value of property acquired by the bank as part of partner financing and subsequently repurchased by the client from the bank in instalments is legalized – a surrogate loan at interest. As for the concept of “remuneration in the form of a variable value, the value of which varies depending on the results of these transactions”, here we can talk about the fact that, depending on the amount of profit from the sale of an asset acquired at the expense of borrowed funds, the value of the shares of the client and the bank may also change, according to their agreement between by myself. Conditionally, if the profit is 10%, we divide it in half, and if 20%, then 60% by 40% in favour of the bank. However, there can be no certainty in such an interpretation, since the wording of the bill in its current form is so vague that it allows for many contradictory interpretations.”


The text of the publication is posted on the Kommersant website:
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