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Monday February 6th, 2023

Sri Lanka starts new payments services as online banking soars in Covid-19 lockdowns

ECONOMYNEXT – Sri Lanka’s interbank clearing house, Lanka Clear, is starting an easy-to-use mobile cash transfer and an automatic bill payment facility as internet banking use in the country soared during a Coronavirus crisis when curfews confined people to their homes, an official said.

Sri Lanka had seen a 600 percent growth in internet banking and a 200 percent growth in payments, during Covid-19 curfews, Channa de Silva, Chief Executive Officer of LankaClear (Pvt) Ltd, Sri Lanka’s interbank clearing house said.

Sri Lanka imposed strict curfews from later March, which were relaxed in May as part of successful efforts to curb the spread of Coronavirus.

Sri Lanka has confirmed 2,047 Coronavirus cases up to July 02, of which 947 were linked to a Navy camp. Another 787 were foreign returnees or foreigners and there were 313 cases from the community.

No new domestic cases outside of the Navy cluster had been found since April 30.

“What we realized in the last eventful three months is that the way forward is digital,” De Silva said.

“And the issue most banks face was to get the customers on board to adopt the technology.”

Lanka Clear (Pvt) Ltd had started a mobile phone cash transfer service with a nickname or payment exchange name (PEN) which is available with Sampath Bank and National Savings Bank as well as an automatic bill payment facility, or Direct Debit Authorization.

These initiatives were supposed to be launched in mid-March but due to the COVID lockdowns, it was postponed.

“Now we have a consumer base which is stretched, which is more towards digital,” De Silva said. “So now is the time we need to go and capture them because they have seen the benefits so they will stick to it.”

Nick Names linked to mobile phone number

Payment Exchange Name (PEN) is a real-time peer to peer (P2P) facility for to transfer cash from a mobile phone with an easy to remember nickname which is linked to their mobile phone number and an underlying bank account.

Banks will assign each account with a unique nickname that will be linked to the mobile number that is registered with them, but it could also be linked to the national identity card or driver’s license.

“In future, you will not need to know branch code, account number, all that,” Channa de Silva, Chief Executive Officer of LankaClear said.

“The receiver does not need to divulge any bank credentials. This also eliminates fund transfers to incorrect accounts”.

National Savings Bank and Sampath Bank are the first banks to offer the facility which allows payments of up to 500,000 rupees.

Under PEN only the sender will need to have a smartphone and not the receiver as money will go directly to a bank account, which will make it easier for people in the rural areas to receive payment.

De Silva said the PEN is a system similar to the Unified Payment Interface (UPI) in India. UPI in India has carried out 1.23 billion transactions with a value of 2.2 trillion Indian Rupees by May 2020.

He said less tech-savvy people could also use the system as it is based on nicknames.

Periodic payments with an upper limit

Lanka Pay also launched Direct Debit Authorization (DDA), which allows utility bills or installments to be paid automatically when they fall due like a standing order.

However, the customers could set a limit where only cash for bills below or up to the limit could be deducted by the service provider.

With DDA, customers would have the convenience of giving a mandate to the bank of a third party to pull up to a certain amount of funds from their bank account on a given date, without the customer having to initiate the payment, Lanka Clear said.

Electricity bills, water bills, telephone bills, or other payments like insurance premiums could be made using DDA.

These initiatives were supposed to be launched in mid-March but due to the COVID lockdowns, it was postponed.

Once all the banks come on board, banks, insurance companies, leasing companies, and utility companies would find it a useful feature to get their dues on time, De Silva said.

“For most people payment is not a problem but time is,” he said.

Peoples Bank, National Savings Bank, Standard Chartered Bank, Deutsche Bank, Public Bank, Seylan Bank, LOLC Finance, Commercial Leasing and Finance, and Citizens Development Finance PLC are providing DDA to their customers. (Colombo/July02/2020-sb)

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Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

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Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

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Sri Lanka’s Ceylon Tea prices down for second week

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1                     Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained.   Others and poorer sorts were easier.

PEKOE                 Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week  2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)

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