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What has Sri Langka accomplished vis-a-vis Islamic finance?

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By Suapi Shaffaii

Colombo, Sri Langka

Facts and Figures:

  • 77 percent of its population Buddhists and Muslims constituting 8.5 percent, is one of the few non-Islamic countries to have legislations for Islamic banking.
  • The revised Banking Act No. 30 of 1988, amended in 2005, allows both commercial banks and specialised banks to operate on a Syariah-compliant basis.
  • 22 commercial banks, comprising two large state-owned banks — Bank of Ceylon and Peoples Bank together with nine private banks and 11 foreign banks.
  • Total assets as at end of July 2005 was US$11.76 billion. The two-state banks accounted for about 48 percent of the total assets while the foreign banks accounted for 14 percent.
  • 13 licensed insurance companies e.g a takaful operator named Amana Takaful.


Regulator of financial institutions in Sri Langka:
The Central Bank of Sri Langka. Established in 1950 under the Monetary Law Act No 58 of 1949.

Snapshot on the Legislative Framework in Sri Langka

Key legislative enactments under the administration of the Central Bank:

  • Monetary Law Act (MLA) No. 58 of 1949. An Act to establish the Monetary System of Sri Lanka and the Central Bank, to administer and regulate the system and to confer and impose upon the Monetary Board of the Central Bank powers, functions and responsibilities necessary for the purposes of such administration and regulation, and to provide for connected matters.
  • Local Treasury Bills Ordinance No. 8 of 1923. An ordinance to provide for the borrowing of money by the issue of Treasury Bills in Sri Lanka.
  • Registered Stock and Securities Ordinance No. 7 of 1937. An ordinance to make provision for the creation and issue of registered stock, government promissory notes and bearer bonds for the purpose of raising loans in Sri Lanka.
  • Exchange Control Act No. 24 of 1953. An Act to make provision conferring powers, and imposing duties and restrictions, in relation to gold, currency, payments, securities, debts, and the import, export, transfer and settlement of property, to authorise the Central Bank to administer the provisions aforesaid, and to provide for matters connected therewith.
  • Banking Act No. 30 of 1988. An Act to provide for the introduction and operation of a procedure for the licensing of persons carrying on banking business; for the regulation and control of matters relating to the business of banking; and to provide for matters connected therewith or incidental thereto.
  • Finance Companies Act No. 78 of 1988. An Act to control and supervision of Finance Companies and to provide for matters connected therewith or incidental thereto.
  • Finance Leasing Act No.56 of 2000. An Act to provide for the regulation and monitoring of finance leasing businesses; to specify the rights and duties of lessors and lessees and suppliers of equipment; and to provide for matters connected therewith or incidental thereto.
  • Payment and Settlement Systems Act No 28 of 2005. An Act to provide for the regulation of payment, clearing and settlement systems; for the disposition of securities on the books of the Central Bank; for the regulation of providers of money services; for the electronic presentment of cheques; and to and to provide for matters connected therewith or incidental thereto.
  • Financial Transactions Reporting Act No. 6 of 2006.An Act to provide for the collection of data relating to suspicious financial transactions to facilitate the prevention, detection, investigation and prosecution of the offences of money laundering and the financing of terrorism respectively; to require certain institutions to undertake due diligence measures to combat money laundering and the financing of terrorism; to identify the authority which will be responsible for monitoring the activities of all institutions to whom this act applies; and to provide for matters connected therewith or incidental thereto.

Written by Suapi Shaffaii

August 5, 2008 at 3:00 am

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