Money

LB Finance ventures into Islamic finance

By Azhar Razak
Sri Lanka’s leasing firm LB Finance this week launched its entry into Islamic finance by setting up a brand new company named Al Salamah. The new entity, which is registered as a finance company by the Central Bank of Sri Lanka will offer a wide range of financial services to the public including investment accounts, trade financing, leasing and gold loans (pawning) structured according to the principles of Sharia Law (Islamic law).
“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 Murabaha terms and investment accounts on Mudarabah terms,” Managing Director of LB Finance, Sumith Adhihetty told at the launching ceremony held at Ramada Hotel in Colombo.
He said that Al Salamah will offer a Sharia 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,” Adihetty said adding that all their operations will be monitored by a qualified Sharia Supervisory Council to ensure that everything they would do is one hundred percent within the principles of Sharia 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,” Adihetty further noted.
It has been a very difficult few years for the financial sector in Sri Lanka and many financial institutions both 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, but many have been failed by institutions which were mismanaged. 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,” said Adhihetty.
Meanwhile, he also pointed out that there is a popular misconception in Sri Lanka that Islamic finance is unsuccessful and justified that 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.
When asked to explain the reason behind the entry of LB Finance into the business, Adihetty explained that the Board had in fact had the plan for the past few years but was held back due to the financial crisis.
“Now we believe it is right time with the country recovering from a prolonged civil war and the financial market getting back to normal after the recession. We have identified, particularly in the East, a high demand for Islamic finance. In fact, recent research we have done in the area shows that conventional banks will not be able to hold their own, particularly in those areas where there is a predominantly Muslim population. Even in other parts of the country, Islamic finance is catching up fast. As an organisation sensitive to market changes, this paved the way for our entry in to Islamic finance market,” Adihetty said explaining further that until the new company achieves break even, part of the Mudarabah investment from LB Finance will only be utilised to meet its operational expenses.
LB Finance operates through a highly-integrated network of branches offering cutting-edge solutions through services such as acceptance of deposits, leasing, hire purchase, micro financing, inland money transfer, gold loans, agricultural equipment leasing and other credit facilities.

 

AAI partners young entrepreneurs Sri Lanka

Founded in 1919, in USA, Junior Achievement Worldwide is the world’s largest and fastest emerging organisation focussed on grooming and educating children on business, economics and entrepreneurship in a realistic manner. Young Entrepreneurs Sri Lanka (YESL) functions as the franchise holder of Junior Achievement Worldwide and was incorporated in 1998. YESL, a nonprofit entity, is financed by businesses, donor agencies and foundations.
The programme conducted by YESL assists young generation by creating the opportunity for them to experience the factual world by guiding them to generate wealth, effectively manage the generated funds, create jobs which make their communities more robust and apply the entrepreneurial thinking to practical scenarios. Whilst nurturing their inherent skills and capabilities YESL provides them with appropriate education to meet the demand of the emerging global business world.
Recognised as the “’Professional’ in the industry, AAI has identified the role professionalism plays in the development of an organization and individual. The company believes that ‘Professionalism’ drives individuals to reap excellent results even in the face of adversity. It is in this mind set that AAI stepped forward to foster the youth as they stride up to face the future challenges. Under their unique CSR project themed “Contributing towards moulding future professionals”, the company supports the schools that are burdened with numerous expenses for primary needs, to nurture the talents of students. As an extension of this initiative, AAI was honoured to sponsor the High School Level programme for Ananda College and Musaeus College, Colombo in partnership with YESL.
High School Level programme is intended for GCE O/L and A/L students facilitating them to gain insights on complexities and rewards of free enterprise system. The students are given the task to form companies under the guidance of volunteer business advisors; obtain hands on experience in electing officers for the company, producing and marketing products or services, maintaining records, conducting stockholders’ meetings and liquidating approximately within 15 weeks.
Under this unique programme, Ananda College has already launched companies named Apex 2010, Nation X and Econac; Musaeus College has launched Neara, Phaedra and Equinox Companies. These companies will be recognised at the YESL Annual Awards Ceremony.

 

HSBCAdvance customers receive exclusive privileges

HSBC announced the launch of a designated webpage on HSBC’s corporate website for HSBCAdvance customers to provide them a one-stop portal for information on special offers, loans, referrals and promotions conducted by the bank.
The new webpage will help HSBCAdvance customers avail themselves of many exclusive privileges, offered to them by the bank with easy access 24/7 on www.hsbc.lk/advance.
Customers will have the distinct advantage of reserving tickets for matches, movies and many other special events organized by the bank by simply logging on line and accessing the HSBCAdvance page and clicking on “special offers”.
They will also have the facility of applying for loans without visiting the bank, by simply completing the one page application form and faxing it to the given number and also keep themselves abreast of the latest offers and promotions updated regularly.
In addition, Customers will be able to refer their family and friends to HSBCAdvance by giving the name and contact details via this channel.
Senior Manager – HSBCAdvance Thanuja Gunasekera said, “Since the launch of HSBCAdvance in February this year, we have regularly introduced convenient banking services to customers. The instant cash disbursement facility through Keells Supermarkets to customers and third parties nominated by them and Easy Loans, are two such services customers have come to truly enjoy. The introduction of a designated webpage is yet another value addition offered for the benefit of our customers. We invite HSBCAdvance customers to frequently check the webpage for the latest exclusive offers they can expect as a valued customer.”
HSBCAdvance is a new banking experience offering an all-in-one integrated proposition covering current and savings accounts, deposits, investments, insurance and credit cards.
For more details, customers can log onto www.hsbc.lk/advance.

Pan Asia Bank shows gratitude to forces

The Prime Minister handing over the key to army soldeir Copral E.P.Mahinda Edirisuriya who obtained the first loan under the Ranaviru Harasara scheme. Deputy Minister of Finance and Planning Chandrasiri Gajadeera, Chairman of Pan Asia Bank A.G. Weerasinghe and DGM of David Peiris Motor Company S.W.Nihal Silva are also in the picture

 

NDB Bank donates books to Jaffna library

Jaffna was a cultural and literary stronghold and a city of great cultural and traditional values. Great scholars came forth from Jaffna, and the Jaffna library was a significant symbol of this literary greatness.
As a world-class Sri Lankan Bank, NDB Bank continues its efforts to empower the youth of our nation to overcome tomorrow’s challenges by focussing on the Banks strategic CSR initiatives of Education and Entrepreneurship. In line with this strategic CSR focus, the Bank has donated a large number of books to the Jaffna library recently. High quality supplementary reading material on different subjects was donated by the Bank, catering to the needs of young children as well as university students. NDB Bank is playing its part to revive this great landmark of Jaffna. With the reawakening of the Northern and Eastern provinces, the communities have the opportunity to rebuild their lives and achieve their ambitions. The Jaffna library plays a vital role in this activity, enabling the students to obtain the relevant reading material required for their studies. NDB Bank is pleased to be a part of this activity that will in return benefit the community at large by helping develop truly world-class Sri Lankans.
NDB Bank is one of the fastest growing commercial banks in the country with the NDB Group having regional operations in the Maldives and Bangladesh. The Bank offers a wide range of commercial banking services through its growing island-wide branch network; which has now grown in the Northern and Eastern Provinces. In addition, as part of the NDB Group, its customers have access to a full range of banking and financial services, including Retail banking, Corporate banking, Project finance and SME lending through NDB Bank; Investment banking, Stock brokering and Wealth management through the Investment Banking Cluster, and Insurance solutions though AVIVA NDB Insurance, making NDB truly universal. The Bank’s AA (lka) rating by Fitch Ratings Lanka is amongst the best in the industry and reflects NDB Bank’s strong financial profile in terms of its capital base, profitability and asset quality. Maintaining the highest standards of competence and probity, NDB Bank is firmly on track to achieve its cherished vision - to be a World Class Sri Lankan Bank

 

IFC, NDB Bank to expand renewable energy financing

IFC, a member of the Word Bank Group, will share NDB Bank’s risks to help finance a larger quantum of renewable energy projects, including mini-hydro and wind power projects in Sri Lanka.
IFC is extending a $12.5 million risk-sharing facility to NDB Bank to support the country’s power-generation capacity while addressing climate change. The project is expected to produce economic benefits for local project developers, including small and medium enterprises. The initiative is part of IFC’s strategy to help the private sector mitigate climate change impacts while continuing to meet significant infrastructure gaps in South Asia.
“Lucrative mini-hydro energy options are becoming scarce while opportunities in wind power are growing. Bankers now need to secure projects with a different risk profile for funding,” said NDB Bank’s CEO Russell de Mel. “The risk sharing agreement with IFC protects NDB Bank from possible risks and enables expanding its exposure to renewable energy projects,” he explained.
IFC will share its financing, project-structuring capability, and benchmark data for renewable energy technologies with Sri Lanka. IFC also will further enhance NDB Bank’s ability to appraise projects using these technologies.
IFC Director for South Asia, Paolo M. Martelli said, “The initiative will support Sri Lanka’s efforts to increase private participation in wind, hydro, and biomass projects. With most of the country’s power generation reliant on fossil fuels, this project will help the country diversify its energy infrastructure.”
The project follows a unique distributed-generation approach, with smaller-scale production of electricity at or near energy demand improving reliability of supply and lowering pollution by using renewable sources.

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