Economy, Business And Markets

Tehran, Moscow Explore Setting Up Islamic Bank

Tehran, Moscow Explore Setting Up Islamic BankTehran, Moscow Explore Setting Up Islamic Bank

Russia and Iran are exploring the establishment of an Islamic bank as the two countries expand economic cooperation, TASS news agency cited Russian Energy Minister Alexander Novak as saying.

As reported by Reuters, the entire banking system in Iran must abide by Islamic principles such as a ban on interest and gambling, which foreign firms would need to follow if they are to grab business ranging from long-term financing to insurance.

“The creation of a Russian-Iranian Islamic bank was discussed. Our banks are exploring the mechanism; the related decision has not been made yet,” Novak said at a bilateral meeting held in Tehran.

No timeframe or potential size was given for the proposed bank, which would be the first such institution operating in the two countries.

State-linked Russian lenders Vnesheconombank, Sberbank and Tatfondbank have been developing Islamic financial products of their own over the past year.

Iran is keen to diversify funding options for its companies. At present, most financing in Iran is sourced from domestic lenders with only a small portion sourced from foreign sources and the capital markets.

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