Chief Executive Officer and General Manager at People’s Bank, Ranjith Kodituwakku, offers insights on how the bank intends to navigate the unfolding economic crisis and assure and empower its customers.
What is your reading of the unfolding crisis and outlook for the year?
We expect 2022 to be another challenging year. The forex crisis will continue to cause shortages and accentuate inflationary pressures on the economy. Under these trying circumstances, we will continue to focus on our strengths: our strong financial performance, digital drive and quality of service. Our focus and commitment to the people of this country and enhancing our product portfolio and services are more significant now than ever before and enable us to make a difference as we help our customers navigate the troubled waters. From the perspective of the bank and its investors, we will be treating this year as a year of consolidation, focusing on improving our operational efficiencies to withstand the macroeconomic volatilities that will continue throughout 2022.
How do you see the unfolding economic crisis impacting the banking sector?
There are quite a few factors negatively impacting the banking sector right now. However, no challenge is insurmountable if banks are willing and able to adapt, be agile, innovative and committed to objective decision-making. For example, banks may need to increase productivity through rationalization, technology and robust cost controls to address the thinning margins.
Analysing the state of the economy, the pressure comes from the forex liquidity crunch. There are a few factors that contributed to the decline. Tourism earnings fell from $5 billion to a trickle ever since the 2019 Easter bombings and the Covid19 pandemic that soon followed. Worker remittances have also declined from pre-Covid highs of $7 billion annually. At the same time, our trade deficit continued to widen, and we also had external debts maturing, leading to fast-draining reserves. The ensuing currency depreciation and domestic production challenges sent inflation accelerating.
People’s Bank is well-capitalized to withstand the pressures from this crisis. In fact, we are the most capitalized bank in the market and maintain statutory capital and liquidity buffers above and beyond the regulatory limits.
How is People’s Bank positioned to confront the challenges and generate growth?
People’s Bank began its digital drive in 2015 and has since made great strides in that sphere, enabling us to conduct a large part of our transactions via digital banking channels, thus reducing operational costs. In addition, we will continue to hold customer experiences as the bedrock on which we will grow our customer base, developing innovative banking products and services to cater to evolving customer needs. The customer-centric, digital-led strategy has helped People’s Bank remain relevant and generate robust growth over the years, so we will only intensify that approach.
How will People’s Bank support enterprises during these challenging times to unlock growth opportunities?
Since its inception, People’s Bank has lived up to its purpose and founding objectives of developing the rural banking system, improving accessibility to banking and uplifting the people by enabling inclusive growth. The bank amply demonstrated its devotion to duty as defined by its founding mission when the Covid19 pandemic broke out in 2020. Even today, this drive to go above and beyond dictates our response to the present crisis.
For instance, we launched the agriculture-based harvest loan scheme to create a self-sufficient country and so far provided Rs.2.3 billion over 15 months ending 31 December 2021 alone. We introduced novel loan schemes such as Made in Sri Lanka to promote local industries, Saarabhoomi to encourage local production of fertilizers, pesticides, and herbicides, Vanitha Saviya for empowering women entrepreneurs, and Business Power to uplift small and medium enterprises. We recently launched the People’s Spark Entrepreneurship Development Programme to empower Sri Lankan youth passionate about entrepreneurship and running their businesses. Recently, we conducted a six-day workshop for selected young people covering various fields related to entrepreneurship with the involvement of local business professionals and university lecturers. We will review their business plans and take steps to provide viable enterprises with a loan of up to Rs.2.5 million without security.
We have launched a campaign to encourage migrant workers and professionals to remit their earnings via official banking channels. We have also taken steps to support exporters, local industries with their forex requirements, and those importing essentials like food and pharmaceuticals.
What is your value proposition to SMEs fighting for survival and export companies and others seeking to expand overseas?
In addition to making credit accessible, we also make it a point to offer flexible solutions to SME customers because we are well aware of the challenges they have to face in their journey towards success. We also provide business know-how to SME customers. Last year, we commenced a programme to encourage entrepreneurship among the educated youth, hoping to inspire a new generation of entrepreneurs.
You explained the importance of technology. People’s Bank accelerated its digital drive in the last few years, but will you now maintain that pace?
It makes sense to do so, now more than ever. Our strategy is to use technology to lower operating costs and enhance customer experiences. One challenge typical of the services industry is maintaining consistency in service quality, and we intend to address this by deploying technology. For example, when a large share of your transactions happens via digital channels, you can be assured of consistent quality in what your customers experience. The digital drive frees manual resources, so our people can devote themselves to tackling more complex customer requirements. We are also open to exploring the possibility of introducing a complete virtual banking experience in the future as we pursue our goal of becoming the most digitalized and the best digital bank in Sri Lanka.