Sri Lanka Islamic insurer short of compliant investments

Sept 15, 2010 (LBO) – Amana Takaful, an Islamic insurer in Sri Lanka says the market does not have enough investment vehicles that are compliant with Shariah laws and also local regulations, where it can invest funds. Investment income from bank had fallen to 18.7 million rupees in 2009 from 36.2 million rupees a year earlier.

Sri Lanka’s general rates of interest on government Treasury bills were also falling steeply amid lower inflation and rate cuts the firm said.

In Sri Lanka the stock market had moved up steeply.

“Amana Takaful being a Sharia’h compliant company, however, has its restrictions and therefore could invest only in few companies,” chairman Tyeab Akbarally said.

“The development of non interest based investment vehicles is a continuing battle for Amana Takaful.

“We have had several rounds of discussions with banks and financial institutions with a view to developing non interest based investment vehicles.”

Akbarally said new insurance regulation may allow additional opportunities for investment including in gold and finance companies that offer compliant products.

“This would facilitate Amana Takaful to invest in these vehicles and increase the investment income,