Islamic banking assets to reach $ 1.5 billion

Indunil Hewage

Sri Lankan Islamic banking assets would reach $ 1.5 billion from the present $ 250 million in coming years, says Amana Bank Chief Executive officer Faizal Salieh. Of the country’s 21.5 million people, about 8 % are Muslim and there is a strong demand for Islamic financial products from the Muslim population as well as from non-Muslims.

Though the local Islamic finance is still at a preliminary stage, it is developing. Local Islamic Finance industry would grow at a double digit rate over medium to long term and the growth is attributed to the increased awareness of faith based concepts and the internalization of the financial markets.

Islamic finance total assets in Sri Lanka account for 3 % of the total financial assets of the country,which is very small relative to those in neighboring Bangladesh and Pakistan, while total deposits and loans of local Islamic finance accounts for 5 %. Islamic Finance could play a key role in the development of infrastructure projects and the capital markets of the post war era of Sri Lanka. Amana Bank, Sri Lanka’s only full-fledged Islamic lender, plans to double its branches by expanding in rural areas, forecasting a six-fold growth in demand.

According to Central Bank sources, Sri Lanka has currently five non-Islamic lenders who are offering Shariah-compliant services through booths.

The Sukuk market has the potential to attract investors to finance projects such as roads, bridges, ports, airports and other activities in the country. Sovereign Sukuk is a means of attracting funds alternative to conventional sovereign bond.

However, lack of qualified professionals in the industry, not only in Sri Lanka, but across the globe has been the major problem faced by the industry and total workforce of the local Islamic finance is estimated to be around 1,500.