Contrary to popular belief, Sri Lanka isn’t over banked and to achieve the projected double digit growth, it needs more banks, Central Bank (CB) Governor, Nivard Cabraal says.“We need more banks to transform the country into a strategically important economic centre of the world," he told the Business Times on the sidelines of a Bank Director’s Symposium organised by the CB and held in Colombo this week. He added that the CB is open to more foreign banks coming into the country.
He told more than 300 directors of licensed banks that they must assess their business models in the face of the global and local economic challenges in a bid to reposition the banking sector. While reiterating that ratings the banks get need to be leveraged to attract foreign funding, Mr. Cabraal said that there’s a limit to how much capital banks can raise through rights issues.
Delivering the keynote address at the symposium which was on “Delivering stability and growth in a challenging environment”, Mr. Cabraal cautioned that global developments are likely to be challenging and they will have an impact on Sri Lanka.
He added that Sri Lanka needs to have a more internationalized approach as increasing turmoil on the international front is worrying. “The banks should enhance credit ratings and credibility to attract new investors, increase banks branch network and their presence overseas encouraging foreign participation in Tier 2 debt capital," he said.
This is the fourth symposium to be held with a view of updating and sharing the new developments in the regulatory and the banking business reforms in order to ensure banks’ resilience to the challenging environment. Mr. Cabraal said the country’s US$ 50 billion economy is tipped to grow at a record 8.3 % this year, up from a 32-year high of 8 % posted last year to $100 billion in 2016 and the Colombo stock market capitalization will increase from the current 30 % of GDP to more than 70 % by 2016.
It is estimated that the banking assets should expand from Rs 4 trillion to Rs 8 trillion in doubling per capita income. Mr. Cabraal said that directors must be involved in strategic issues and planning by attending all board meetings and provide clear strategic policy direction and leadership for senior management. |
E-mail
