Banks should focus more on reviving economy rather than earning to much profit
Local banks should focus more on helping to revive the economy, said Chairman Board of Investment and former Chairman of Hatton National Bank and Commercial Bank, Dinesh Weerakkody in an interview.
“Bank should not focus too much on exploiting profit opportunities in investment and in financial instruments, which carry risks in conditions of lagging growth.”
Sri Lanka needs stronger, bigger banks. The Government should push for consolidation keeping in view synergies and the benefits of mergers.
Banks are vital bedrock institutions in any economy as they significantly contribute to the development of an economy through facilitation of business. Banks also create money and facilitate the growth of savings in the economy, and are instruments of the Government’s monetary strategy, among many others.
“The most important service provided by a bank is the provision of credit. Credit fuels economic activity by allowing businesses to invest with leverage and beyond their cash on hand.”
Asked for comments on Rs. 1.4 trillion of Non-Performing Loans in the banking sector and the solution for it he said, “The problem is billions in impaired tourism, real estate and other assets are sitting on bank balance sheets awaiting recovery with an improvement in the wider macro environment, which is very challenging.”
This pushes banks to redeploy resources away from credit growth and a much needed contribution to GDP.
Asked how adequate is the CPCEC Act on Offshore Banking in the Colombo Port City he said, “In my view improvements are required to address the entire gamut of financial services which encompasses banking, insurance, non-financial instruments.
“To ensure CPC has an effective banking regime in the port city, we have completed benchmark studies.”
Weerakkody who is also the Portcity Colombo Commission Chairman says Sri Lanka is an attractive destination for investment despite some challenges the economy faced in the aftermath of the post economic crisis
“There is enormous potential for investments in the agriculture, tourism, information technology, renewable energy, and education sectors.”
In addition, the government has committed to a wide array of important structural reforms.
“These include reforms to stabilize the current crisis, such as enhanced revenue mobilization, improving tax administration, cost-recovery based energy pricing, safeguarding financial sector stability, and a stronger social safety net to protect the most vulnerable.”
“They also include reforms to enhance productivity and competitiveness, streamline Sri Lanka’s trade and investment environment and unlock the country’s growth potential, and address governance and corruption issues.
Asked to comment on the cause for the longstanding structural weaknesses of the Lankan Economy he said that most of the weaknesses Sri Lanka had were elevated by a series of exogenous shocks.
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