Local Islamic Finance Industry to grow rapidly

Indunil Hewage

Local Islamic Finance industry is to grow at a double digit rate over medium to long term, and growth is attributed to the increased awareness of faith based concepts and the internalization of the financial markets.

Total assets of Islamic finance in Sri Lanka account for 3 % of the total financial assets of the country while 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.

The booming of the industry and the development of Sukuk market have the potential to attract investors to finance projects such as roads, bridges, ports, airports and others. Sovereign Sukuk is a means of attracting funds alternative to conventional sovereign bond.

Sri Lanka in its drive for rapid development should grasp the opportunities that emerge due to the transition of Islamic finance into the mainstream global finance,” KPMG said.

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 1500.

According to KPMG, Sri Lanka still faces the limitations of investment avenues for new banks.