Abstract:
Islamic finance is one of the fastest growing industry in the world. It has structured the banking and
financial products and services within the parameters of Shariah. The Shriah compliant tools for
financial transaction have been prudently designed by the scholars to offer the products and services.
The Mudharabah is one of the tool which is employed by the Islamic financial institutions (IFIs) to
provide various financial products and services. From the inception of industry Mudharabah has been
used by the IFIs as an alternative mechanism for saving account. However, the modern it has been
catered the interest of researchers whether the nature of Mudharabah fulfill all the features of saving
account. In this regard there are number of challenges and issues are identified and those issues are
rectified by the IFIs in their practices. On the other hand, some IFIs removed the Mudharabah from the
operation of saving accounts. However, in Sri Lanka, many IFIs have practiced Mudharabah as a tool
for their saving account. Therefore, this study has been carried out in order to find out whether the same
challenges are still available at the IFIs in Sri Lanka. Amana Bank which is the pioneer in Islamic
finance in Sri Lanka and the only fully fledged Islamic bank in the country has been selected as sample
for this study. Qualitative method was employed to carry out this research. Primary data were gathered
though interview and group discussion with banking professionals. Secondary data was obtained
through research articles, website news, official websites of IFIs and the like. As the objectives of this
study some challenges were found on the modern application of mudharabah in saving account. The
researchers have put forward some recommended for the better usage of Mudhrabah saving account for
future operations.
