Financial trailblazer LB Finance is once again set to revolutionise the industry, this time with Al Salamah, its brand new Islamic Finance unit.
Al Salamah is to offer a wide range of financial services including investment accounts, trade financing, leasing and gold loans (pawning), all structured according to the principles of Shari’a Law, and will be available to all Sri Lankans regardless of ethnicity and religion.
In the initial stages, Al Salamah will focus mainly on its Ijarah leasing service, which is one of LB Finance’s main strengths, and will also offer hire-purchase services on Murabah terms and investment accounts on Mudarabah terms. Al Salamah will also offer a Shari’a-compliant Islamic gold loan (pawning) facility called Ar Rahnu due to intense demand from the Muslim community. LB Finance has been planning to launch this unit for several years but held back due to the turbulent economic conditions in the last few years. Al Salamah’s activities are to be completely independent from the main body of LB Finance, including management and financial accounting.
“Al Salamah is a name which represents safety, security, and integrity,” said Mr. Sumith Adhihetty, Managing Director of LB Finance. “All our operations will be monitored by a qualified Shari’a Supervisory Council to ensure that everything we do is one hundred percent within the Shari’a Law.
We will be offering four main products to start with including Mudarabah Investment Accounts, Murabaha Trade Financing, Ijarah Leasing and Ar Rahnu Gold Loans. These are tried and tested services in the Sri Lankan market, and we are positive that we will see a great deal of response from consumers.”
It has been a very difficult few years for the financial sector in Sri Lanka and many financial institutions, conventional and Islamic, have suffered heavily and even collapsed. LB Finance, however, has been on the crest of a wave, growing from strength to strength and the company is confident that they can succeed in this pioneering endeavour. “Consumers are attracted to the interest-free element of Islamic finance,
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but many have been failed by institutions which were mismanaged,” said Mr. Adhihetty. “A veritable Islamic finance company based on equity and fair-play, who manages their Mudarabah Fund correctly, would seldom fail, as proven by several other players in the market who have been thriving for over a decade.”
LB Finance is certain that Al Salamah will play a key role in rebuilding the financial sector after the economic downturn of the last years as well as the war. “We believe that Al Salamah is an ideal tool to overcome the current market conditions,” stated Mr. Adhihetty. “There is a popular misconception in Sri Lanka that Islamic finance is unsuccessful, yet over half of the 10 largest commercial banking organisations in the world maintain their own Islamic finance windows, and some of the largest growths in Islamic finance around the world over the past several years have occurred in non-Muslim countries.”
“Sustainability in Islamic finance depends solely on the strength of the organisation’s Shari’a compliance,” said Mr. Adhihetty. “This will be our forte since we will be adhering to all the Shari’a requirements with the utmost respect and stringency. Al Salamah will be guided by a well-respected and erudite Shari’a Supervisory Council in addition to being monitored by the Central Bank of Sri Lanka.”
LB Finance operates through a highly-integrated network of branches offering cutting-edge solutions through services such as acceptance of deposits, leasing, hire purchase, microfinancing, inland money transfer, gold loans, agricultural equipment leasing and other credit facilities.