Lanka ORIX Leasing Company PLC (LOLC), an innovative Financial Solutions provider in Sri Lanka launched a range of Shari’ah compliant financial products (financing done in accordance with Islamic Principles) in a media conference held in Colombo recently. The company pioneered Leasing and Factoring to the Sri Lankan financial services sector and continues to make a vital contribution towards the growth of this sector. Lanka ORIX Finance company Ltd, a fully owned subsidiary of LOLC is the only Finance Company in Sri Lanka registered under the Central Bank to be granted approval to mobilize Shari’ah compliant deposits. The entry of the LOLC Group into the arena of Islamic Financing will add momentum to the growth of the product due to rapid product innovations and country-wide distribution through its strategically placed branch network.
Islamic Finance is fast moving from being a niche market product to becoming a mainstream component of the global banking system and is recognized by international bankers and economists. The origins of the concept of Islamic Financing dates back over a 1000 years and it was structured as a form of banking in the 1960s. However the first fully-fledged Islamic bank was formed in 1975 and the surge in the industry came mainly during the last ten years or so. Today, it is a sizeable market internationally with an asset base of approximately $600 billion as at last year and is growing at an annual rate of 35%.This industry has approximately 470 players consisting of Islamic banks and financial institutions.
The newly set up Islamic Business unit of LOLC will offer Ijarah (Leasing), Murabaha (Trade Financing), Mudharabah (Profit Sharing Investments) and Diminishing Musharakah (Property Financing) initially and these services will be supervised by the Shari’ah supervisory board in order to assure that these services are strictly guided by the Shari’ah principles. The company has established a separate Islamic Business Unit (IBU) for Islamic Finance Solutions in order to ensure that this product is managed in strict compliance. The IBU has a dedicated team headed by reputed Islamic scholars of the Shari’ah Supervisory Board. This Unit has its own unique brand identity, namely ‘LOLC Al-Falaah’, which is derived from the Arabic Language and means “success”. The Unit is also supported with the necessary infrastructure such as IT, Documentation and Financial Accounting which are based on Shari’ah principles. All LOLC branches have a Shari’ah certified executive marketing these products.
Group Managing Director and CEO of LOLC Mr. Kapila Jayawardena addressing the media conference said “Apart from the potential for Islamic finance to succeed in the Sri Lankan market, the demand for these products was a compelling reason for us to launch these products. With the assistance of the eminent scholars Ash-Shaikh Fazil Farook and Ash- Shaikh Murshid Mulaffar in the Shari’ah board we will be able to provide fully Shari’ah compliant Islamic services to our clients. These two scholars are executive members of the ACJU (All Ceylon Jammiyyathul Ulama) Banking Advisory Committee, consultants on Islamic Finance and senior lecturers of several Islamic Theological Schools. LOLC’s branch network around the country will allow easy access to potential clients and be a boon to the growth of this sector.