ECONOMYNEXT – Sri Lanka’s rupee closed at 330.60/70 to the US dollar in the spot market on Monday, weaker from 330.55/65 the previous day, while bond yields closed broadly steady, dealers said.

A bond maturing on 01.08.2030 closed at 11.12/20 percent, down from 11.15/20 percent.

A bond maturing on 15.10.2030 closed flat at 11.20/25 percent.

A bond maturing on 01.02.2031 closed flat at 11.25/30 percent.

A bond maturing on 15.12.2032 closed flat at 11.67/75 percent.

A bond maturing on 15.10.2034 closed at 11.95/12.05 percent, down from 11.99/12.05 percent. (Colombo/Oct5/2026)

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed lower on Monday, CSE data showed, with the benchmark All Share Price Index moving down 0.81 percent.

The ASPI was down 168.38 points at 20,644.26, while the more liquid S&P SL20 was down 0.55 percent, or 32.27 points, at 5,851.23.

Positive contributors to the ASPI were Hemas Holdings (up 0.96 percent at 31.40 rupees), C T Holdings (up 1.89 percent at 540.00 rupees), Distilleries Company of Sri Lanka (up 0.19 percent at 52.90 rupees), and Ambeon Capital (up 3.14 percent at 29.60 rupees).

Dialog Axiata (down 1.53 percent at 45.00 rupees), Commercial Bank of Ceylon (down 0.50 percent at 201.00 rupees), Ambeon Holdings (down 9.27 percent at 32.30 rupees), LOLC Holdings (down 2.05 percent at 430.25 rupees), and Citizens Development Business Finance (down 4.61 percent at 33.10 rupees) were top negative contributors.

Market turnover was 3.16 billion rupees. Capital goods led turnover with 1.72 billion rupees. (Colombo/Oct5/2026)

Fitch Ratings-Dubai/Jakarta: Fitch Ratings expects Sri Lanka’s Islamic finance industry to grow over the medium term, supported by regulatory progress, rising political will, and expanding conventional-bank participation through Islamic windows.

Sri Lanka’s Islamic finance industry exceeded USD1 billion at end-1H26.

Sri Lanka has one of the highest Islamic finance penetration rates among countries with Muslim-minority populations.

However, the industry will likely remain niche due to the population mix, persistent demand-supply gaps, and a weak operating environment.

Muslims are a minority at around 10% of the population, which could constrain mainstream relevance.

Limited distribution channels, product gaps compared to conventional banks, and a still-nascent Islamic finance ecosystem further stifle growth.

Islamic banking accounted for about 91% of Islamic finance industry assets, followed by takaful at around 4% and non-bank financial institutions at around 3%.

Islamic funds and sukuk each represented less than 1% of the total.

Fitch rated the first and only sukuk listed on the Colombo Stock Exchange (CSE), issued in 2025 by Vidullanka PLC (A+(lka)/Stable), amounting to LKR500 million (USD1.5 million).

The sukuk market remains nascent. The Securities and Exchange Commission of Sri Lanka (SEC) and the CSE developed a regulatory framework for listing sukuk, approved in 2023.

In 2024, the SEC published guidelines for accredited sharia scholars entrusted with certifying sharia compliance, supporting standard-setting and market credibility.

Limited access to international sukuk investors and a relatively small domestic sharia-sensitive investor base may have constrained further issuance.

Amana Bank PLC (BBB-(lka)/Stable), Sri Lanka’s only fully fledged Islamic bank, held around 60% of Islamic banking assets.

Islamic windows of conventional banks held the remainder.

Islamic banking remains small in Sri Lanka, accounting for around 1.3% of banking system assets and 1.4% of deposits at end-1H26, up from 1.0% and 1.2%, respectively, in 2024.

Amana Bank’s assets increased by 7% yoy to around LKR215 billion (USD641 million) at end-1H26, while deposits rose by 6.5% to around LKR180.3 billion (USD537 million).

The Islamic Development Bank (AAA/Stable) and IB Growth Fund together hold a 28.2% stake in the bank.

Bank Islam Malaysia Berhad is its fifth-largest shareholder.

These shareholders support knowledge transfer from established Islamic finance institutions.

Amana Bank is covered by the Sri Lanka Deposit Insurance Scheme.

Amana Bank does not invest in government securities due to sharia restrictions, unlike peers.

The introduction of sharia-compliant alternatives to treasury instruments would further strengthen Islamic banking and provide additional options for liquidity management.

The bank parks excess liquidity in interbank placements, resulting in exposure to the sovereign’s credit profile through systemic linkages.

Interest in Islamic banking is rising among many Fitch-rated conventional banks, some of which have operated Islamic windows for over a decade, while others entered the segment recently.

Total assets of Islamic windows collectively rose by around 26% year to date in 1H26, outpacing Amana Bank.

Amana Takaful PLC and Amana Takaful Life PLC (both not rated) are Sri Lanka’s only full-fledged takaful operators.

Their combined assets grew by around 32% yoy by end-2025, outpacing the insurance industry’s 18% growth.

However, their market presence remained limited, with just over 1% of the insurance sector’s total assets and about 2% of gross written premiums at end-2025.

Several other insurance companies offer takaful products through dedicated takaful arms, supporting the segment’s gradual expansion.

Sri Lanka’s Islamic fund assets under management exceeded USD5.5 million in early August, having increased by around 35% from the beginning of the year.

ECONOMYNEXT – Sri Lanka listed real estate firm, Millennium Housing Developers, said it was currently getting legal advice and engaging with state authorities to safeguard a property and protect shareholder interests after an unauthorised entry last week.

The developer said its wholly owned subsidiary, Millennium Housing Limited, is the registered and lawful owner of Land Lot No. 23 depicted in Plan No. 6534 dated 04 September 2007, prepared by D. Prasad Wimalasena, Licensed Surveyor, pursuant to Deed No.660 registered on 13 September 2013, situated at No. 23, Kaduwela Road, Oruwala, Athurugiriya.

The Board of Investment of Sri Lanka had asked for the land for a proposed establishment of a bus station for the Metro Bus Service, through letters on 20 August 2026 and 21 September 2026, the company said.

“The Company has received correspondence from the Board of Investment of Sri Lanka (“BOI”) dated 20 August 2026 and 21 September 2026 regarding a request made in connection with the proposed establishment of a bus station for the Metro Bus Service on the said property.”

“The Company has not consented to the release, occupation, acquisition or use of the said property for the proposed project.”

“The property has been retained by MHL as an asset of the Company and is earmarked for a future development project in accordance with the Company’s business plans.”

On September 27, an unauthorised entry was made onto the said property, and portions of the boundary fencing and gates were removed/dismantled, allegedly in connection with the proposed establishment of a bus station.

Kaduwela Mayor Ranjan Jayalal and National People’s Power Parliamentarian Asitha Niroshana have been questioned by the Police over the incident, Private TV channel Ada Derana reported.

Millennium Housing Developers said it has not authorised or consented to any person entering the property, removing its boundary structures or commencing any work on the land.

Following the incident, the company said it had made an initial complaint to the Athurugiriya Police Station and is taking appropriate legal and administrative steps to protect the Company’s and MHL’s rights and interests in the property.

“The Company wishes to place on record that MHL remains the lawful owner of the said property and has not transferred, surrendered or otherwise consented to the release or occupation of the land for the proposed project.

“Any proposed acquisition, occupation or use of privately owned land must be undertaken through the appropriate legal and statutory process, while respecting the Company’s proprietary rights and the interests of its shareholders.

“The Company is currently obtaining legal advice and engaging with the relevant authorities concerning this matter. The Company will continue to take all appropriate steps to safeguard the property and the interests of the Company and its shareholders.” (Colombo/Oct5/2026)

ECONOMYNEXT — Sri Lanka’s Sanasa Life Insurance Company said it was planning the total divestment of its shareholding in subsidiary Sanasa General Insurance Company Limited.

The parent company plans to completely offload its equity stake in the general insurance arm, comprising up to 30,614,059 ordinary shares representing 53.5 percent of the issued share capital, according to a market filing.

Sanasa General Insurance, which provides tailored individual and corporate general insurance packages, has operated as a core segment of the broader Sanasa financial network.

The divestment is pending statutory and regulatory clearances and shareholder approval.

The Insurance Regulatory Commission of Sri Lanka suspended Sanasa Life Insurance’s registration to carry on long-term insurance businesses in December 2025.

The reasons given for the suspension are:
– Conducting business in a manner which could be detrimental to the interest of the policy holders/insurance industry and national interest.
– Not being able to meet the solvency margin specified by the regulator.
– Has failed to follow the provisions of the Regulation of Insurance Industry Act and the order s/rules and conditions made by the regulator under the said Act.
– Providing data which are false/inaccurate and misleading and has failed/concealed the material facts.

In July, the central bank fined Sanasa Life Insurance 2 million rupees for multiple lapses, including issues with politically exposed persons (PEPs) and incomplete sanctions list maintenance. (Colombo/Oct5/2026)

ECONOMYNEXT – Sri Lanka has sold 8,000 million rupees of treasury bills offered on tap at average rates of 9.25 percent, 9.41 percent and 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 88 billion rupees.

Total market subscription was 20,913 million rupees.

The debt office sold a -month bill at 9.25 percent.

The debt office sold a 6-month bill at 9.41 percent.

The debt office sold a 12-month bill at 9.95 percent.

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Sri Lanka Treasury bill yields rise across maturities, Rs80bn sold
On Wednesday (30) the debt office raised 80 billion rupees of 3, 6 and 12 month bills. (Colombo/Oct5/2026)