Banking
From The Report: Sri Lanka 2018
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Improving economic growth, an increasingly sophisticated domestic market and regulatory reform are the main factors shaping the Sri Lankan banking sector. Stability has become a watchword following a period of rapid credit growth, as a flourishing private sector boosted the development of a previously underbanked market. Although the sector has a healthy growth outlook, the central bank is keen to keep a lid on credit expansion, while higher regulatory standards may trigger long-awaited consolidation. Sound monetary policymaking has helped rein in credit growth to an extent, though respectable economic growth and increasing demand from small and medium-sized enterprises will ensure the rate remains in the double-digits for the coming years. This chapter contains an interview with Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka.

Articles from this Chapter

Overview

A new era: Long-awaited reforms, moderate credit growth and strong macroeconomic indicators bode well for the sector
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Improving economic growth, an increasingly sophisticated domestic market and regulatory reform are the main factors shaping the Sri Lankan banking sector. Stability has become a watchword following a period of rapid credit growth, as a flourishing private sector boosted the development of a previously underbanked market. Although the sector has a healthy growth outlook, the central bank is keen to keep a lid on credit expansion, while higher regulatory standards may trigger long-awaited consolidation. Sector…

Interview

A revenue day: Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka, on aligning monetary policy with inflation and debt targets
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Interview:Indrajit Coomaraswamy How will the Inland Revenue Act affect the tax structure and foreign direct investment (FDI)? INDRAJIT COOMARASWAMY: The Inland Revenue Act will simplify the tax structure and widen the tax base. It addresses declining government revenue-to-GDP ratios and increases tax progressivity. The introduction of taxpayer identification numbers, and efforts to improve tax administration and compliance, will also boost collection. Furthermore, removing tax holidays and…

Analysis

Open market: Strong growth at private banks offers a number of investment opportunities
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Sri Lanka’s private banks enjoyed strong loan and deposit growth in 2017 due to careful asset management and judicious repricing. However, ongoing increases in capital requirements are leading a number of institutions to undertake rights issues and float debenture bonds to raise funds, giving investors a chance to participate in the market’s overall growth. Market Share According to a December 2017 report on the domestic banking sector by Colombo-based investment bank First Capital…

Analysis

Credit where due: More moderate lending growth forecast for Sri Lanka’s banks
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Following several years of high credit growth, lending in Sri Lanka slowed in 2017 on the back of stricter monetary policies and higher interest rates. While credit growth is not forecast to reach the peak levels seen between 2015 and 2016, it is expected to rise moderately from 2018 to 2020 thanks to renewed GDP growth and better credit quality. Cooling Off Private sector credit soared to 25% in 2015 and 22% in 2016 as a result of government efforts to stimulate the economy. Since…