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Friday March 1st, 2024

Sri Lanka CB chief to discuss with CRIB, banks on covid-hit bad loans

ECONOMYNEXT – Sri Lanka’s central bank will discuss with banks and the Credit Information Bureau (CRIB) on borrowing difficulties faced by people who were unable repay their past loans due to the disruptions by COVID-19 pandemic, Governor Nivard Cabraal said.

The central bank in May this year advised banks not to decline loan applications from eligible borrowers solely based on an adverse CRIB record

The central bank also directed banks, in consultation with CRIB, to develop a reporting modality to report deferment/restructuring granted a proposed new scheme which will not have an impact on the credit score of borrowers in the future, or be negatively reflected in future CRIB reports.

However, some small and medium enterprises (SME) have complained that banks have been not helpful, despite the central bank’s advice.

“We have seen some people who are in the CRIB (black) list being given more credit by banks, while some are deprived of the loans,” Cabraal told a media briefing last week.

“If people were not able to repay their loans due to Covid pandemic, we have advised banks to consider their background and help. I expect to have a discussion with CRIB and banks on this in the near future.”

The central bank early this month extended concessionary loans for pandemic-hit businesses until March 31 next year.

Sri Lanka’s average non-performing loan (NPL) ratio is around 5 percent, but it has been on the rise and higher than the average in some banks due to pandemic-hit borrowers’ inability to repay their loans on time.

The CRIB was set up to allow financial institutions and others to check credit histories of potential borrowers and credit limits of customers based on their past records. In a capitalist system, some businesses fail.

A borrower with a clean record may get a prime rate or a higher un-collaterized credit limit while others may require stronger collateralization or higher rates. However in practice they had been used to lock customers out of the banking system, black list them and deny them credit.

“Does it mean that those who have got a credit score of C1 or less should be denied a loan facility? Not at all,” explained W A Wijewardene, the founder General Manager of the CRIB and former Deputy Governor of the Central Bank.

“The credit score reported to banks gives them some background information to put their loan applicants into different buckets and deal with them accordingly,”

“Once this ascertainment is made, the lending bank should offer a higher lending rate to such borrowers to take care of the risks involved. For instance, the best customers of banks, categorised as prime customers, are given loans at relatively low interest rates. (Colombo/Oct19/2021)

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Sri Lanka’s RAMIS online tax collection system “not operatable”: IT Minister

ECONOMYNEXT – Sri Lanka’s online tax collection system RAMIS is “not operatable”, and the Ministry of Information Technology is ready to do for an independent audit to find the shortcomings, State IT Minister Kanaka Herath said.

The Revenue Administration Management Information System (RAMIS) was introduced to the Inland Revenue Department (IRD) when the island nation signed for its 16th International Monetary Fund (IMF) programme in 2016.

However, trade unions at the IRD protested the move, claiming that the system was malfunctioning despite billions being spent for it amid allegations that the new system was reducing the direct contacts between taxpayers and the IRD to reduce corruption.

The RAMIS had to be stopped after taxpayers faced massive penalties because of blunders made by heads of the IT division, computer operators and system errors at the IRD, government officials have said.

“The whole of Sri Lanka admits RAMIS is a failure. The annual fee is very high for that. This should be told in public,” Herath told reporters at a media briefing in Colombo on Thursday (29)

“In future, we want all the ministries to get the guidelines from our ministry when they go for ERP (Enterprise resource planning).”

President Ranil Wickremesinghe’s government said the RAMIS system will be operational from December last year.

However, the failure has delayed some tax collection which could have been paid via online.

“It is not under our ministry. It is under the finance ministry. We have no involvement with it, but still, it is not operatable,” Herath said.

“So, there are so many issues going on and I have no idea what the technical part of it. We can carry out an independent audit to find out the shortcomings of the software.”

Finance Ministry officials say IRD employees and trade unions had been resisting the RAMIS because it prevents direct interactions with taxpayers and possible bribes for defaulting or under paying taxes.

The crisis-hit island nation is struggling to boost its revenue in line with the target it has committed to the IMF in return for a 3 billion-dollar extended fund facility. (Colombo/Feb 29/2024) 

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Sri Lanka aims to boost SME with Sancharaka Udawa tourism expo

ECONOMYNEXT – Sri Lanka is hosting Sancharaka Udawa, a tourism industry exhibition which will bring together businesses ranging from hotels to travel agents and airlines, and will allow the small and medium sector build links with the rest of the industry, officials said.

There will be over 250 exhibitors, with the annual event held for the 11th time expected to draw around 10,000 visitors, the organizers said.

“SMEs play a big role, from homestays to under three-star categories,” Sri Lanka Tourism Promotion Bureau Chairman, Chalaka Gajabahu told reporters.

“It is very important that we develop those markets as well.”

The Sancharaka Udawa fair comes as the Indian Ocean island is experiencing a tourism revival.

Sri Lanka had welcomed 191,000 tourists up to February 25, compared to 107,639 in February 2023.

“We have been hitting back-to-back double centuries,” Gajabahu said. “January was over 200,000.”

The exhibition to be held on May 17-18, is organized by the Sri Lanka Association of Inbound Tour Operators.

It aims to establish a networking platform for small and medium sized service providers within the industry including the smallest sector.

“Homestays have been increasingly popular in areas such as Ella, Down South, Knuckles and Kandy,” SLAITO President, Nishad Wijethunga, said.

In the northern Jaffna peninsula, both domestic and international tourism was helping hotels.

A representative of the Northern Province Tourism Sector said that the Northern Province has 170 hotels, all of which have 60-70 percent occupancy.

Further, domestic airlines from Colombo to Palali and the inter-city train have been popular with local and international visitors, especially Indian tourists. (Colombo/Feb29/2024)

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Sri Lanka rupee closes at 309.50/70 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 309.50/70 to the US dollar Thursday, from 310.00/15 on Wednesday, dealers said.

Bond yields were slightly higher.

A bond maturing on 01.02.2026 closed at 10.50/70 percent down from 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.10 percent from 11.90/12.00 percent.

A bond maturing on 01.07.2028 closed at 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.30/45 percent up from 12.20/50 percent.

A bond maturing on 15.05.2030 closed at 12.35/50 percent up from 12.25/40 percent.

A bond maturing on 01.07.2032 closed at 12.55/13.00 percent up from 12.50/90 percent. (Colombo/Feb29/2024)

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