Abstract:
This study critically examines the extent to which Ijārah nancing practices in
Sri Lanka's Islamic banking sector conform to the principles delineated in the Accounting
and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard
No. 9. Employing a qualitative, descriptive, and exploratory methodology grounded in a
comprehensive literature review, this study synthesises information from peer reviewed
journals, regulatory reports, and institutional documents. It establishes AAOIFI standards
as the benchmark for compliance and systematically analyzes Sri Lankan practices,
identifying key areas of convergence and divergence. The findings reveal a significant
reliance on institutional-level Shariah governance, in the absence of a robust national
regulatory framework. The analysis further uncovered critical gaps, particularly in the
operational mechanics of Ijārah products, which may functionally resemble conventional
nancing in some instances, thereby raising concerns about adherence to the higher
objectives of Islamic law (Maqāṣid al-Sharīʿah). This study provides a comparative
perspective on international best practices. It offers strategic recommendations for
policymakers and financial institutions to enhance Shariah compliance, strengthen
transparency, and foster sustainable growth in the Sri Lankan Islamic nance industry.
