There’s an urgent need for fresh ideas, new thinking and novel concepts to reposition the country’s banking sector into a higher growth path which can be achieved through fresh blood in bank boards, according to the Central Bank (CB) Governor, Nivard Cabraal.
“We hardly have directors who are 40 or below in bank boards and we’re lacking in this aspect of bringing in young blood to help set a higher growth path in our banking sector,” he told the Business Times on the sidelines of his presentation titled ‘Repositioning Banking Towards a Higher Growth Path’ at a Bankers’ Symposium conducted by the CB recently.
He added that managing increasing and complex risk profiles of the banking institutions due to new sources of risks such as international consolidation, institutional framework (of large business conglomerates) and complex banking products and electronic medium of transaction processing and settlement is a major challenge for the local banking industry.
Speaking to the country’s top banking CEOs, he said that in a bid to face the increasing competition and greater consolidation with the rest of the world there’s a need to increase the banks’ branch network and their presence abroad while there’s also a need to compete with new banking institutions, local and foreign, entering the Sri Lankan banking industry.
“Consolidation in the Sri Lankan context is encouraged,” he told the Business Times separately
He told the gathering that the industry needs enhance efficiency to be competitive. “We in Sri Lanka too need to strengthen the banking sector’s ability to absorb shocks arising from financial and economic stress during good times and build adequate buffers to achieve the broader macro prudential goal of protecting the financial system stability from pro-cyclicality and counter cyclicality,” he added.
“How we meet this challenge is by reducing intermediary costs to provide affordable finance to the public,” he explained.
He also noted that there’s a challenge to enhance transparency and market discipline by implementing adequate and accurate disclosures.
Mr. Cabraal noted that directors of the licensed banks have a significant role to play in strictly adhering to mandatory corporate governance rules, providing clear strategic policy direction and strategic leadership covering all core activities of banks for the senior management and also ensuring fit and propriety of senior management of banks.