A rising domestic Muslim population estimated at 17 million, as well as ambitions to tap alternative sources of investment and funding is driving a Russian push to develop its expertise in Islamic finance.

Recent developments include a draft law supported by Russian banks who lobbied the central bank on allowing Islamic finance institutions to enter the Russian market, as well as a recent agreement between Russia’s National Rating and the Islamic International Rating Agency to jointly rate sharia-compliant products.

To provide a further push Russia is looking to Malaysia to assist and build its knowledge and human capital within the sector. In February a delegation from Malaysia, consisting of representatives of the state corporation MATRADE, a subdivision of the Central Bank of Malaysia for development of Islamic finance IBFIM and one of the leading universities University Tun Adbul Razak visited Russia. The legal and economic environment in Russia was assessed, with a view for the development of a feasibility study for opening Islamic windows and launching Islamic banking products in the Russian Federation.

A more recent development has seen one of the oldest universities in Russia, the Kazan Federal University, located in Kazan, Tatarstan this week sign a Memorandum of Understanding with University Tun Adbul Razak to develop cooperation in the field of Islamic banking law.

A delegation from Malaysia visited several Kazan Federal University units including the Institute of Management, Economics and Finance, and the Faculty of Law.

Malaysia has developed considerable expertise in Islamic finance being a pioneer in modern Islamic Banking boasting the world’s biggest sukuk market. It is looking to export its Islamic finance expertise and its banks have successfully assisted in Singapore and the Hong Kong government to issue sukuk.

A planned 2011 sukuk issuance by the Tatarstan Republic was postponed due to “technical difficulties” Bloomberg reported in 2014, and Vnesheconombank, Russia’s state development bank, is seeking advice from lenders in the Middle East on how to sell its first Islamic bonds, the RIA Novosti state-news service reported Dec. 16.

Malaysia was instrumental in the first sovereign Sukuk in the Russian Commonwealth with the issuance in 2012 of the Development Bank of Kazakhstan sukuk for 240 Million Malaysian Ringgit, which was issued in Malaysia.