The State Duma has passed a law in its final reading that establishes an experimental legal regime (ELR) for partnership (Islamic) financing activities in certain regions of Russia. The law, initiated by a group of deputies and senators led by Anatoly Aksakov, Chairman of the State Duma Committee on Financial Market, aims to facilitate an experiment in Bashkortostan, Tatarstan, Chechnya and Dagestan, with the possibility of expanding to other regions with the agreement of the government and the Bank of Russia.
The experiment will run for a two-year period from September 1, 2023, to September 1, 2025, with the potential for extension by the government in consultation with the Central Bank.
Entities eligible to participate in the ELR include credit organizations, non-credit financial organizations, consumer societies, foundations, autonomous non-profit organizations, economic societies and partnerships. The status of an ELR participant is granted upon entry in the register maintained by the Central Bank, and can be revoked when removed from the register.
To regulate partnership financing in Russia, an expert council will be established under the government to propose amendments to the country's legislation.
Participants in the experiment are prohibited from establishing remuneration in the form of a percentage rate, but can use variable remuneration based on transaction outcomes. Financing activities related to tobacco and alcoholic beverages production, weapons and ammunition, trade of such goods, and gambling are also prohibited.
Own funds requirements
Specific accounting regulations will be established by the Bank of Russia for credit organizations and non-credit financial organizations participating in the experiment. For other organizations involved in the experiment, the Ministry of finance of Russia will determine the accounting peculiarities. The minimum amount of own funds (net assets) required for participants that are not credit institutions or non-credit financial institutions will be set as follows: starting from September 1, 2023 - 10 million rubles, and starting from January 1, 2024 - 15 million rubles.
The determination of own funds (net assets) for participants that are not credit organizations or non-credit financial organizations will follow the procedure established by the federal executive body authorized by the government of the Russian Federation.
The law also grants participants the right to attract monetary funds or other property from individuals and legal entities through loans, property trust management, and bond issuances. Anti-money laundering norms have been approved, obligating participants to provide information on transactions, including their nature and purpose, to the authorized body upon request.
Furthermore, citizens have the option to utilize maternity capital when fulfilling obligations under deferred payment contracts for the purchase of residential premises with organizations participating in the experiment.
The law will take effect on September 1, 2023.
GSV "Russia - Islamic World"
Photo: 23artashes/Creative Commons 4.0
Based on materials from TASS