KEY CHALLENGES FACED BY ISLAMIC FINANCIAL INSTITUTIONS IN SRI LANKA IN OFFERING SHARIAH COMPLIANT PRODUCTS AND SERVICES

Abstract

Islamic banking and finance industry is a speedily and widely-ranging growing sector globally since its structured business initiation in the late 20^th century AD. It is actual fact that Islamic and non Islamic nations are seriously concerning their curiosity to implement this potential banking and finance system in their countries and states presently as a result of negative impacts of burdensome interest system on their economics. At the same time, Islamic banking industry started its functions few decades ago among the influence of well established conventional banking and finance sector in Sri Lanka and it is developing gradually among the Muslims and other community people. However, it is notable that in Sri Lanka where Muslims are living minority level, the Islamic banking and financial institutions have to confront a number of challenges in their daily functions and the development as well. Consequently, the main objective of this study is to clarify the major Challenges faced by Islamic financial institutions in Sri Lanka. Accordingly, the study is designed as qualitative method and personal direct interview with semi structured questionnaire is used in data collection. The questionnaire for interview is dealt with selected important matters relating to the particular study. Furthermore, the secondary data required is also collected and utilized from related literatures and sources. Descriptive statistic analytical techniques are used in data analyzing to carry out the study effectively. In this context, the findings reveal that there are many negative impacts faced by Islamic banking and financial institutions in Sri Lanka in the operations of offering Shariah compliant products and services by means of the major challenges. Consequently, it is much important to find proper solutions to overcome these challenges and in the development of the sector.