Plans to develop Shariah interbank market

Sanjeevi JAYASURIYA

The Shariah interbank market will be developed in Sri Lanka to position the country to become a regional player. The possibilities are being looked at to raise a Shariah bond and negotiations are taking place at present.

The Sri Lankan banking industry landscape needs to be changed to incorporate better practices. Hence, Shariah is a concept that could be adopted by any customer not only Muslims, we need to promote this banking model, Wealth Lanka Management Chairman Mangala Boyagoda said.

“We will combine our exclusive strengths to introduce specialized Shariah linked financial instruments, incorporating true Shariah principles to the local market for the benefit of not only for Muslim brethren, but also for the country at large,” he said.

Islamic finance specialist Al Tayseer Advisory Services (Al Tayseer), a part of International Al Tayseer Group, signed a Memorandum of Understanding with Wealth Lanka Management (Pvt) Ltd, a local consultancy firm to jointly develop Shariah linked financial instruments for the local market by pooling their individual expertise. Many banks and financial institutions are experiencing increased demand for Shariah linked products and this demand is expected to grow further. As such, our focus will be to develop short and medium-term Shariah based financial instruments for banks, finance companies, leasing companies, corporate entities as well as the government,” he said.

“We are confident that entering into this new venture is both timely and appropriate. The launch of the venture would help support the government endeavours as well as offer alternative and innovative financial products in line with Shariah principles. In the backdrop of the dawn of peace and the government’s commitment to develop capital markets will have positive impact on the venture, Boyagoda said. The Shariah concept is different from commercial banking and there is a need to educate and train the public to gain benefit. The country’s Shariah banking will be developed according to the Malaysian model and discussions are underway with two banks to develop a road map, Al Tayseer Director Edwin Das said.

“Al Tayseer has identified Sri Lanka as an emerging market for Islamic finance. We have much to offer for the country’s business community in terms of Islamic banking advisory, consultancy, training, legal and compliance, regulatory framework and policies,” he said.