With an ambitious plan of making Sri Lanka as the Islamic banking hub, the Bank of Ceylon, (BoC) the leading state owned commercial bank is now fully geared in implementing Shari'ah Compliant Banking .In an Exclusive interview with Sunday Times Free hold section, Bank of Ceylon Deputy General Manager, Product & Development Banking, Sam Samarasinghe said that the entry of the BoC as a full-fledged Islamic financial institution that can provide the Sri Lankan Muslim Community the opportunity to invest or deposit their money in a Shariah Compliant manner was very appropriate at a time when the country was heading towards becoming the miracle of Asia under the directions of President Mahinda Rajapaksa .
He noted that the time was now opportune to capitalise on the opportunities presented by the booming industry by diversifying the BOC product portfolio and meeting the increasing demand for Shari'ah-compliant finance in the island. Muslims make 8.5 per cent of the 20 million population of Sri Lanka and the target group wasaround 1.7 million he said.
The BoC Islamic Banking unit set up in 2009 has now become a fully-fledged division with a professional team of bankers to steer this strategically important financial operation. The aim is to attract international attention for investment in Islamic Finance in order to play a major role as the leading facilitator in the SAARC region. He expressed the belief that the BoC would be able to become and retain No 1 position in the Islamic Banking Industry in Sri Lanka, thereby enhancing the profitability of the bank by contributing a substantial share from this sector.
Mr Samarasinghe emphasized the need for this diversification adding that the bank's preliminary estimates indicaed that there was huge potential in the area of Islamic finance. He noted that BoC would contribute significantly to the industry by providing banking services to 'clientele who request Shari'ah-compatible products' both domestically and internationally. Our main strengths are our dedicated team of staff members who have been properly trained to handle Islamic Banking , a highly respected members of Sri Lanka's highest Muslim religious body are in our Shari'ah board, further strengthening the confidence of our clients " said Mr. Samarasinghe.
The bank's extensive domestic network of 309 branches will accept deposits from clients who request Shari'ah-compatible products' and the BOC head office is handling all Islamic Banking operations ,supervised by a Shari'ah Board of renowned and well respected Shari'ah scholars.BOC AN-NOOR (the ray of light ) is the brand house for all Islamic Banking products and services. Mr Samarasinghe noted that the funds mobilized from investors were managed through Shari'ah compliant investment methods in a transparent manner.BOC AN-NOOR's products are available to all communities irrespective of their faith. The currently available products are AN-NOOR current accounts, ordinary savings, children's savings, leasing ('Ijara' ) finance for vehicles, and machinery , trade finance and term loan ('Murabaha') and Wakala working capital and fund management.
The bank will soon introduce AN-NOOR's NRFC and rupee Mudaraba fixed deposits , partnership, Agri business finance, manufacturing finance and bonds.
The bank also plans to expand the Islamic banking horizon from national to global by introducing Shari'ah-compliant operations firstly to its branch in Male, the capital of the Maldives, and then to other overseas branches. At the moment, the bank has an overseas presence in the Maldives, India and the UK., he said.
Sri Lanka is one of the few non-Islamic countries that have legislation for the Islamic banking sector. Following amendments to the Banking Act No 30 of 1988 in March 2005, there is now adequate flexibility for conventional banks to establish Islamic banking windows and launch Islamic financial products.
However, efforts in strategic marketing communication to promote and raise awareness of these products are still in the infancy stage he said. The Islamic finance is the fastest growing industry in the world, worth over US$ 1 trillion, which clearly demonstrates the industry's potential despite the global financial crisis and the consequent economy downturn. Interestingly, industry is already catering to as many as 15% non-Muslim customer base worldwide he said.
The Sri Lankan government has allowed enough avenues in the fiscal and regulatory policy framework to facilitate Islamic finance since 2005.
Furthermore, positive support and a favourable financial regulatory environment are encouraging for Islamic financial institutions to set up operations and for local and international investors to participate in taking the island's Islamic finance industry to new growth.
The Bank of Ceylon is determined to lay a stable foundations for the future development of Islamic finance in Sri Lanka to tap the large propertion of Middle East market be invested in the Islamic Finance market.
With Sri Lanka's mega post-war development projects in the pipeline such as infrastructure and economic development, Sukuk (Bond) issuance will potentially attract widespread international and local investors' interest.Therefore the BoC is also looking into this aspect as well, Mr. Samarsinghe said. |
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