The forum, hosted by KPMG Sri Lanka and addressed by Neil Miller, KPMG’s Global Head of Islamic Financial Services who is an International expert in the field of Islamic Finance however highlighted that this is because there are fewer short term liquidity management options available to them to manage their surplus liquidity.
The round table discussion, while comparing Islamic finance in other countries, interestingly commented on the role of tea as a commodity and the role it could play on Murabaha based treasury placements.
“Another issue highlighted was that while conventional banks can manage their surplus liquidity by transferring funds to interest-yielding accounts with Central Banks (even on an overnight basis), most Central Banks do not offer any Shari-a compliant returns to Islamic Banks on a similar basis. It was also pointed out that an investment other than on a short term basis can create a mismatch in the maturity profile of an Islamic bank’s assets and liabilities thus exposing the bank to a greater risk. The forum also noted that most of the Islamic Finance institutions in Sri Lanka were only engaged in issuing Murabaha, Mudaraba, Ijara and Diminishing Musharaka,” a participant at this conference told The Nation.
The participant, who did not wish to be quoted, said that another key matter discussed was the treasury placement issues for Islamic banks.
KPMG Sri Lanka hosted a CEO and Islamic Finance Industry Leaders Round Table Discussion on Friday t September 7, at the KPMG premises in Colombo.
The event had commenced with a presentation by Miller covering the areas of money market instruments, financing and capital market product, consumer financing and government notes for Islamic Finance. This was followed by an interactive discussion with the audience on the status of the development of Islamic Financial services in Sri Lanka; where the industry peers pointed out the issues pertaining to the lack of investment opportunities facing Islamic financing institutions in the country.
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com