• Amãna Bank PLC Our Model - Main Visual

Our Model

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We at Amana Bank approach banking differently. Guided by our principles we present a new way in Banking enriched with Honour, Humanity, Stability and Uniqueness to all our customers. We believe the concept of interest is to be the root cause for most economic and financial problems faced across the world today . Hence why our products offer a profit sharing platform where your earnings would be the result of real economic activity which creates prosperity for the society at large.

That’s why we do not involve ourselves or your investments in socially harmful industries such as liquor, gambling and tobacco irrespective of how profitable they may be. Our mission is to enable growth and enrich lives of people of this country.

We have launched a series of informative animated videos to educate the public on the distinctive differences between conventional banking and our model of non-interest based participatory banking . The video series is available below for you to learn more about the highlights of the many people friendly features on offer on the various banking solutions.

Understand Our Model

Understand Our Model
  • Islamic Banking vs Traditional Banking

    Islamic Banking vs Conventional Banking

    Is Islamic Banking any different from Conventional Banking? Watch this video to enlighten yourself

  • Trade Based Financing

    Trade Based Financing

    How does Trade Based (Murabaha) Financing work?

  • Vehicle Financing

    Vehicle Financing

    How does Vehicle Financing work? (Ijarah)

  • Home Financing

    Home Financing

    How does Home Financing work? (Diminishing Musharakah)

  • Savings and Investment Accounts

    Savings and Investment Accounts

    How does Saving & Term Investment Accounts operate in an Islamic Bank?

  • Gold Safekeeping

    Gold Safekeeping

    How does Gold Safekeeping Work?

  • Emergency Cash

    Emergency Cash

    How does Emergency Cash Work?

Why you should bank with us

Why you should bank with us

How does Amana Bank look at factors of production?

Under the interest based theory one would learn that land generates rent, labour generates wages, capital generates interest and that entrepreneurship generates profit and loss.

Amana Bank does not believe that capital generates interest. Instead we believe that capital too generates profit or loss. We don't believe that money by itself can generate more money.

Why we believe interest based transactions are harmful to the economy?

The concept of interest is argued to be the root cause for most economic and financial problems faced across the world today. Let us explain why.

Investment involves risk which qualifies the term "No Risk. No Reward". However, interest based banking defies this.

Example 1: Assume you put Rupees 1000 in a drawer and locked it. You could open it in one year and be assured to see the same amount (Rupees 1000). This is a platform where you are not taking any risk on the money you have and just ensuring that your money is safe. How silly would it be to expect to see Rupees 1100 when you open the drawer in one year? You did not take any risk with your money. Therefore there is no possibility of getting a reward beyond your original amount.

Example 2: Assume you invested Rupees 1000 in a business. Can you be guaranteed that you will be able to get back the Rupees 1000? Can you be guaranteed that the business will be profitable so that you could make something extra above the Rupees 1000 in a given period? Furthermore, is there a way that you can be guaranteed to make Rupees 100 extra (10% return) as profits within a given period?

Your natural answer will be NO. You are taking a risk with your money by investing it in a business. Therefore while there is a possibility of you making profits over and above your investment there is also the possibility of you making losses and even losing your original amount.

The above examples clearly exhibit the relationship between taking risks and obtaining rewards. While all of us agree on the above, somehow we seem to be blind to the fact that the interest based banking model defies this reality.

The interest based system allows a person to deposit Rupees 1000 in a one year fixed deposit and assures that the capital is guaranteed and will be given back in one year's time. It also assures to pay a guaranteed return at an agreed rate (Ex: 10%) where the person will be able to generate Rupees 100 extra. In summary the person is able to invest Rupees 1000 today and be assured of getting Rupees 1,100 in one year. How is this possible? Where is the element of risk which is naturally part of wealth creation and investments?

This defiance of reality in the interest based model restricts the investor's earning potential out of his investment and leads on to create many of the economic problems prevalent in today's world.

The next explanation will shed light on one such major disadvantage.

Interest based banking discourages entrepreneurship

The world is made of surplus units and deficit units. Surplus units are people who have excess money and do not have the knowledge, expertise or preference to engage in business. Deficit units are people who do not have the sufficient amount of money, but do have the knowledge, expertise and are keen to engage in business. For an economy to grow the surplus units and the deficit units need to be brought together towards forging entrepreneurship.

The primary role of Amana Bank is to channel money from the surplus units to the deficit units in a fair and equitable manner where both units are able to have a fair share of the risks and rewards involved in enterprise.

The interest based banking model guarantees the capital and the return to the surplus units (depositors) where they don't face such risk. This risk is transferred in totality to the deficit unit (borrowing entrepreneurs). Accordingly apart from the challenge of coming up with a business idea and operationalising the business successfully the entrepreneur is landed with the additional burden of ensuring the business generates a profit over and above the interest rate offered by the bank to the depositor plus the bank's margin. The entrepreneur will be able to survive only if he is able to face all these challenges and manage all these risks successfully. This is an unfair playing field for entrepreneurs and discourages entrepreneurship.

Further more even a person who may have the required money and is also interested in starting a business will be discouraged by the interest based banking model. Given the choice one would easily resort to deposit money in an interest based bank with a capital guarantee and a guaranteed interest as opposed to engaging in business where neither the capital nor the returns are guaranteed. This comfort leads people to be lazy and un-ambitious thereby affecting real wealth creation in the economy.

While there are many such negativities in the interest based banking model, for the purpose of this document we believe the above points are sufficient to convince you as to why Amana Bank doesn't engage in interest based transactions.

What did people in the past have to say against the concept of interest?

"Money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of any modes of getting wealth this is the most unnatural" Aristotle (Philosopher)

"Money is a measure, and usury (interest) diversifies the measure placing extra demands on the money mechanism which harmed its function as a measure." Acquinas (Philosopher, Theologian)

"Money is medium in exchange, and not terminus." Henry of Ghent (Philosopher)

"If usury(interest) were permitted rich people would prefer to put their money in a usurious (Interest based) loan rather than invest in agriculture. Only the poor would do the farming and they didn't have the animals and tools to do it. Famine would result." Pope Innocent IV (1250-1261)

"Usury (Interest) concentrates the money of the community into the hands of the few." St. Bernardine of Siena (1380-1444)

“The function of money is not to make more money but to move goods. It moves goods from man to man. If a postage stamp will not carry a letter, or money will not move goods, it is just the same as an engine that will not run.” Henry Ford (Industrialist and Founder of the Ford Motor Company)

What does the modern world have to say about non interest based banking?

"Despite the current global financial crisis, Islamic finance continues its growth as an increasingly viable alternative banking system for both Muslims and non-Muslims. It will be a vital component of the new global financial infrastructure" – Ian Luder, Lord Mayor of the City of London, United Kingdom.

"Islamic banking is saying we are close to our clients and we're only going to do genuine transactions where we can see the asset, we understand the asset, we can make an assessment of that asset: whether it's financing a ship or an aircraft they will go and have a look at the business. It's giving guidance as to what banking should be" – Neil Miller, Head of Islamic Finance, Norton Rose and adviser to the British Government.

"The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service." – Osservatore Romano, Vatican's official newspaper.

"If global banking practices were based on Islamic practices then we wouldn't be seeing the kind of crisis we are living through now" – Saleh Al Tayar, Secretary General, Franco-Arab Chamber of Commerce.

How popular is non interest based banking across the world?

Non interest based banks are now located in over 50 countries around the world, including the United States, and there are over 450 institutions. Their asset base is more than US $ 1 trillion and is propelling ahead with an average annual growth rate of 15% - 20%.

What are the underlying values and beliefs of Amana Bank?

Amana Bank's operations are guided by our strong beliefs.

We believe that you have a right to be treated fairly
This is why our investment products offer a profit sharing platform where your earnings would be the result of real economic activity which creates prosperity for the society at large. We do not restrict your earning potential by promising fixed rates. We also rid you from the guilt of benefiting unfairly at the expense of the community. This is why we do not simply lend money to people on interest with minimal regard to the resulting economic activity. When we finance your needs we form partnerships, which come with a genuine concern for success and creates a platform of fairness and transparency.

We believe that one should not gain at the expense of another
This is why we recognize genuine misfortunes and don't believe in profiting from the likes of late payment penalties. We do not burden you further during a genuine downfall with snowballing charges. We will be keen to guide you through your hardship towards prosperity. We stand by you through adversity and profit only when you prosper.

We believe that being responsible and ethical is as important as making profits and gains
This is why we do not involve ourselves or your investments in socially harmful industries such as liquor, gambling and tobacco irrespective of how profitable they may be. We would always guide you against borrowing beyond your capacity. Where a genuine distress prevails we will attempt to offer financial assistance, repayable with no additional charge.

We believe that entrepreneurship should be encouraged and given a fair opportunity to succeed
This is why we value sound and viable entrepreneurial initiatives and are open to consider platforms of risk sharing where the capital provider and the entrepreneur are partners, with a mutual interest on the profitability of the business. The gains for both parties will come through a profit sharing platform where returns are realistically linked to actual performance. This we believe creates a fair opportunity for promising entrepreneurship to succeed. All our financing solutions involve real assets, thereby keeping your business on course and protecting it from a crisis of escalating and uncontrollable debt, while also protecting the society at large from the negative effects of the resulting inflation.

We believe that the best of actions are the ones which create true happiness in people
This is why we will discourage wasteful borrowings triggered by ego and pride. Such borrowings are bound to bring years of worry and difficulty in repayment. True happiness is when you lead a life of conscience where no harm has been triggered by your actions or your money. True happiness is when you have lived within your means, maximized your potential and brought happiness to the people around you.

How does Amana Bank claim to be superior in its social responsibility and concern?

Let us assume two proposals requesting for funding is presented to an interest based bank. One of it is for building a school and the other is for the setting up of an alcohol factory. Traditionally the bank will look at both proposals and evaluate the repayment capability of the borrower and the industry attractiveness of the business. The most probable result of this evaluation is where the funding for the alcohol factory would be preferred by the bank over the funding for the school due to industry attractiveness.

But where is the concern for society? What about the positive effects a school can have on society and the negative effects an alcohol factory can have on society?

Amana Bank operates with the greater good to society always in mind. We operate with a self imposed prohibition, where we will not fund any industries which are harmful to society such as alcohol, tobacco and gambling among others. This validates our claim to be superior in social responsibility.

How does Amana Bank claim to be superior in offering social justice?

In most cases an interest based bank would continue to demand repayment of principal and interest from its borrowing customer, with little regard to whether or not if the customer is making profits from his business investment. Such banks may also continue to make their claims even if the customer faces a calamity such as the Tsunami.

Amana Bank does not believe in profiting from a customer when he is in genuine hardship. We would partner with him and help him out of his hardship and stand to benefit only through the customers success and happiness and not through his failure and sorrow. This is our superiority in offering social justice.

How does Amana Bank claim to be superior in ushering better discipline to banking?

Amana Bank strictly follows an asset-based financing model. This brings about a high level of discipline by not allowing the debt to exceed the growth of the real economy. The introduction of such a discipline carries the potential of helping realise not only greater stability, but also greater efficiency and equity in the financial system.

The asset-based financing model along with the self prohibition of not dealing in debt instruments were key factors which ensured the stability of non interest based banks across the world in the face of the recent financial crisis which left many scars in the global banking industry.

How can one be assured about the stability of Amana Bank?

  • Amana is the first Islamic financial institution in Sri Lanka which was established in 1997
  • Amana Bank is the only Licensed Commercial Bank in Sri Lanka to conduct all its operations under the principles of Islamic banking and the only bank in the country which is fully disengaged from interest based transactions.
  • Amana Bank is the undisputed market leader in the Sri Lankan Islamic banking industry.
  • Amana Bank has the rare combination of three strategic shareholders who are sound and reputed banking institutions in the region (Bank Islam - Malaysia, Islamic Development Bank - Saudi Arabia and AB Bank - Bangladesh).
  • "It's Your Bank" - a unique banking concept in line with the faiths, principles and expectations of all communities; it is a Bank that yearns to ensure prosperity and true happiness to all customers through its unique, humane and honourable value proposition.

What do I do next?

I am convinced about the non interest based banking model Amana Bank is promoting. I am happy with the strong values and beliefs of Amana Bank. I respect the social responsibility, social justice and the financial discipline offered by Amana Bank. I am convinced of the stability of Amana Bank. I want to be banking with Amana Bank. What do I do next?

We are delighted and honoured by your decision to bank with us. Please call us on 011 7 756756 or visit any one of our branches. We are keen to understand your banking needs and offer you convenient and rewarding solutions at all times. Please let us know if you notice areas where we could improve our services to you. We are keen to listen, learn and improve continuously. After all we are 'Your Bank'.

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