Legal aspects of ethical (Islamic) banking (case study of a Murabaha contract)

Introduction: the issues of legal regulation of partner (Islamic) banking in Russia took on particular importance under the conditions of economic pressure put on Russia by a number of countries. The issue of attracting investment to the country, from the states of Asia and the Middle East in particular, has become especially essential nowadays. The development of partner banking in Russia is promoted by the fact that the population of Russia includes a significant number of Muslims, who are familiar with Shariah principles being fundamental for Islamic economy. Purpose: to analyze the essence and main features of the legal regulation of Islamic banking, the similarities and differences between the major approaches applied in Shariah principles and in Russian legislation, to identify problematic issues, and suggest possible ways of solving thereof. Methods: the present study is conducted based on a set of scientific methods, including analysis and synthesis, interdisciplinary approach and comparative legal studies. Results: the present paper demonstrates that the implementation of partner banking instruments is constrained by certain current prohibitions and restrictions in Russian legislation. Partner banking instruments are based on the fundamental principles of Shariah and theological doctrine, which in a number of cases do not fully correspond to, and sometimes conflict with, the legislation. The authors have considered the peculiarities of Islamic banking through the example of a Murabaha contract as the main institution of financing based on Shariah princi-ples. The authors have concluded that in Russia there are various approaches to the issue of how to implement the instruments of Islamic banking in the Russian legal system, from zero tolerance to the need for an appropriate regulatory framework. Introduction of alternative, and especially Islamic, financial instruments in the country’s economy determines the need to intensify the methods of harmonizing the norms of banking legislation and the Bank of Russia’s regulations for arranging banking risk management, for effective banking operations and transactions in the integration processes of forming a single banking market. In this regard, publiclaw measures and contractual-legal forms of banking activities become the most important factor in ensuring financial stability of credit institutions and banking security. Conclusion: in order to create a sufficient legal framework for partner banking in Russia, it is necessary to use the whole toolkit of legal relations combined with the world experience. In order to start implementing the partner (Islamic) banking tools into the country’s economy, it is sufficient to make selective changes to legislation that would eliminate the most significant obstacles for the Islamic economy development. Afterwards, when the partner banking development shows its efficiency for the Russian economy, in order to attract foreign investments, a broadscale legislative change will be needed. Besides, for Russian banks, which are not familiar with the legal peculiarities of partner banking instruments functioning, it is necessary to develop standards for partner banking and related services, standard contract forms and methodological recommendations on how to provide services in partner banking.