The application of Salam contract in Sri Lanka

Abstract

Islamic banking is one of the fastest growing industries all over the world. In Sri Lanka even it is a non-Muslim country it has achieved a significant growth within the short period of time. However it has been observed that none of the Islamic banks in Sri Lanka are involved in Salam financing. Bai Salam contract can be considered as alternate mode of agriculture financing. Its main objective is fulfilling the needs of poor farmers who require money for farming and the production of agriculture. Also the Salam Finance have great potential to contribute in Sri Lanka's economic development. The purpose of this research is to identify the factors behind the non-implementation of Salam finance in Sri Lankan Islamic financial institutions. And providing suggestion to implement the Salam finance in Sri Lanka. This is a qualitative, descriptive paper in terms of methodology. As a result, this study was based on the literature as well as expert opinion gathered through an interview and self-prepared questionnaires. There are several factors that cause the maximum lack of Salam contract application in Sri Lanka. And the researchers also discussed Salam models proposed in the literature in order to implement proper Salam finance in Sri Lankan Islamic financial institutions.