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Monday December 5th, 2022

Sri Lanka’s Commercial Bank says ready to help customers worst hit by COVID-19

DESERTED: Colombo’s usually crowded Galle Face beach front is deserted as Sri Lanka is on non-essential Coronavirus holiday.

ECONOMYNEXT- Commercial Bank of Ceylon, Sri Lanka’s largest private lender is ready to support borrowers whose cashflows would be hit in a worse than average disruption from the COVID-19 Coronavirus pandemic, a top official said.

President Gotabaya Rajapaksa had called on banks to halt collections of working capital loans for six months in response to the disruptions from the coronavirus.

“Commercial Bank welcomes the relief measures outlined by the President,” Managing Director Sivakrishnarajah Renganathan told EconomyNext.

“However, if there is a requirement for further support for a customer, we are willing to accommodate it.

“We as a bank have a duty to collect our loans, but we gave those loans based on assumptions, and now those assumptions have changed in the new environment.”

“We understand that cash flows of our borrowers have been affected under the coronavirus outbreak. Some have had their businesses disrupted over a month ago, while others won’t see the impact until six months later.”

“So, we ask our customers to write to us, clearly stating all of their problems in servicing loans, and we will look at even 8 or 12 month moratoriums if they are required.”

The bank would look at the exact requirements of each borrower based on their unique situations, Renganathan said.

By Monday evening, President Rajapaksa had extended the moratorium to credit cards, apparel and tourism industries and to small and medium-sized businesses.

Commercial Bank had stopped collection calls for overdue loans a week earlier, Renganathan said.
Sri Lanka has been under an island wide curfew since Friday to stop the spread of the coronavirus, which has also hindered loan collections and denying services to customers who depend on brick and mortar banking branches.

Commercial Bank and its peers have encouraged customers to switch to digital transactions through call centres, or ATMs when the curfew lifts for 8 hours on Monday and Tuesday, while practicing government-recommended social distancing and hygiene if visiting branches.

The tourism industry, currently at a standstill, had been under a loan moratorium until March 31 to recover from the April 2019 Easter bombings, and large number of small and medium-sized enterprises were just starting off a moratorium to help the economy recover when the pandemic hit.

Renganathan said Commercial Bank would look at giving relief to such borrowers as well.

While automated systems would transfer performing loans to non-performing loans if three instalments are in arrears, which would hit bank profitability, Renganathan said Commercial Bank is hoping to have talks with the Central Bank on whether the system could be changed for the duration of the crisis.

Banking sector non-performing loans had risen to 4.7 percent at end- 2019 from 3.4 percent a year earlier and 2.5 percent at end-2018 due to a lengthy period of low growth coming from two currency collapse, as the central bank targeted interest rates with liquidity injections.

Meanwhile, Banks are also discussing the possibility of charging lower commissions on services such as cheques, and delaying penalties on credit card arrears to help the nation overcome the crisis, Renganathan said.

So far, banks’ liquidity is sufficient to meet interest on deposits, which are being fulfilled on time, Renganathan said.

“Banks maintain a liquid asset ratio of 20 percent, and some banks like Commercial have 30 percent. So there are no liquidity shortages yet.”

“There is some concern on how fast the country bounces back to normalcy. The government and the team of experts working on the crisis are doing a marvellous job, so there is no issue yet.”

The government has promised to give 46 billion rupees in interest arrears to banks over senior citizens scheme, which would help liquidity.

If there are signs of the nation bouncing back from the pandemic by end-April, Commercial Bank could see an 8 percent growth in credit for 2020, Renganathan said.

“There are still a lot of people looking to grow their businesses and there are some infrastructure projects as well which we would like to finance,” he said.

Sri Lanka’s credit growth had slowed to 4.5 percent in 2019 from 15.4 percent a year earlier.

Before the latest crisis, the central bank had hoped for private credit to grow 12-13 percent in 2020, with both a fiscal and monetary stimulus package to jump-start the economy, which was growing at just over 2 percent.

Renganathan said the government has helped facilitate the smooth operation of banks’ internal processes during the crisis, and Commercial Bank has allocated more of its staff into call centres and clearing transactions, especially at a time when monthly salaries are usually remitted.

Meanwhile, the banking working group which is working with the government to ensure the operation of essential banking services during the pandemic has also additionally forwarded a set of proposals to the central bank to help reduce the burden on banks during the crisis, he said. (Colombo/Mar23/2020)

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Time right for elections, Sri Lanka Podujana Peramuna ready to face any poll: Basil

File photo: SLPP national organiser Basil Rajapaksa

ECONOMYNEXT — The time has come for an election in Sri Lanka and the ruling Sri Lanka Podujana Peramuna (SLPP) is ready to face any election, SLPP national organiser Basil Rajapaksa said, dismissing claims that the party has come to fear elections in the face of growing unpopularity and increased factionalisation.

Speaking to reporters at an event held in Colombo Monday December 05 morning to mark the fourth anniversary of the party’s media centre, Rajapaksa handwaved off assertions that the SLPP has splintered in the wake of the mass protests that ousted his brother and former President Gotabaya Rajapaksa.

“No, our party hasn’t fragmented, not the way this cake was cut,” he said, pointing to the cake that was cut to celebrate the media centre’s anniversary.

“There may be some [dissenters], but we are with the people,” said Rajapaksa.

Political analysts, however, note that the once mighty SLPP has indeed fractured to at least four or five distinct factions. One group, according to party sources, is with President Ranil Wickremesinghe who is keen to involve younger SLPP legislators in his economic reform agenda. The second is with former Media Minister Dullas Alahapperuma who launched an unsuccessful bid for the presidency and was roundly defeated by Wickremesinghe at the July 19 presidential vote in parliament. The third group now sits as independent MPs in parliament, while a fourth faction are with former President Mahinda Rajapaksa, the SLPP patriarch.

There is another group that remains loyal to Basil Rajapaksa, though all but one SLPP legislator voted for the 21st amendment to the constitution that prohibited dual citizens from entering parliament. Rajapaksa, a dual citizen with US passport, recently returned to the island after a private visit to his second home.

The former finance minister, who resigned after a wave of protests that demanded his departure along with that of his presidential brother, for their alleged role in Sri Lanka’s prevailing currency crisis, the worst in decades, was in a jovial mood at the anniversary event on Monday and was seen heartily indulging reporters who were throwing loaded question after loaded question at him.

Asked about future plans of the SLPP, Rajapaksa quipped that they couldn’t be revealed to the media at this stage.

“However, time has come for an election. It’s difficult to say how it will be at present, but as a party, we’re ready to face any election,” he said.

Rajapaksa’s apparent confidence in facing an election is in direct contrast to speculation that the SLPP is banking on President Wickremesinghe’s refusal to dissolve parliament anytime soon. Opposition lawmakers have accused Wickremesinghe of providing sanctuary and promising security to the deeply unpopular party by not calling early elections.

“We have won every election we faced so far. We are thankful to the Sri Lankan people for that. If we were unable to meet their expectations 100 percent, we regret that. We will correct any shortcomings and will work to fulfill the people’s aspirations,” said Rajapaksa.

Asked if he is going to remain in active politics despite the blanket ban on dual citizens, the former minister said, again with a chuckle: “Active politics… well, I’m not in governance anymore. Governance [for me] has been banned by the 21st amendment. So no, I’m not in governance, but I am in politics,” he said.

Pressed about possibly entering parliament again, he said: “How can I?”

Nor is Rajapaksa saddened by the development, he claimed. “No, I’m happy about it,” he said.

The former two-time finance minister, noted for his clash of views with Wickremesinghe when the latter was invited by then President Gotabaya Rajapaksa for a round of discussions on economic recovery, was cautiously complimentary when asked about the new president. It was the SLPP’s backing that guaranteed Wickremesinghe his lifelong ambition.

“I think that selection was the correct one. We have maintained from the start that all of us in government or opposition must be able to freely engage in politics,” he said, referring to assurances that the president has purportedly given SLPP parliamentarians that they will not face the kind of retaliatory mob violence that engulfed the nation on May 09 after alleged SLPP goons attacked peaceful anti-government protestors in Colombo.

A reporter asked if Rajapaksa believes the incumbent president is capable of taking the country on the right path to recovery?

“The first task was accomplished, by allowing us to engage in politics and to get on the streets. There are economic and other issues, and we have high hopes that they will be resolved,” he said. (Colombo/Dec05/2022)

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Sri Lanka proposed power tariff not to recover past losses: Minister

ECONOMYNEXT – The government has not proposed a power tariff increase to recover past losses, Minister of Power and Energy Kanchana Wijesekera in response to a statement attributed the head of the power regulator commission.

“The proposal that was presented was for an automatic cost reflective tariff mechanism to be implemented to supply uninterrupted power & to recover the current cost of power supply,” Minister Wijesekera said in twitter.com message.

“Govt has not proposed to recover past loses of CEB from a tariff revision…”

The cabinet of ministers had given the nod tariff revisions twice a year to prevent large losses from building up as in the past.

The Public Utilities Commission has disputed costs protected for the power utility saying the petroleum utility was keeping large margins in selling fuel.

The government in a budget for 2022 also proposed to tax surcharge to recover losses.

The regulator also disputed power demand forecasts.

Also read; Sri Lanka regulator disputes CEB costs, demand projections for 2023

The PUCSL cannot increase tariffs to recover past losses, Chairman Janaka Ratnayake said. (Colombo/Dec05/2022)

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Sri Lanka’s shares gain in mid market trade

ECONOMYNEXT – Sri Lanka’s shares edged up in mid day trade on Monday (05), continuing the positive run for seven straight sessions on news over a possible debt restructuring from Paris Club, analysts said.

All Share Price Index gained by 0.69% or 60.10 points to 8,829, while the most liquid shares gained by 0.96% or 26.59 points to 2,801.

“The market was pushed up over the news of a potential 10 year debt moratorium,” analysts said.

The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis. 

Related – Paris Club proposes 10-year moratorium in 15-year Sri Lanka debt re-structure: report

The market generated a revenue of 2.1 billion rupees.

Top gainers during 1130 hours were Expolanka, Browns Investment and LOLC.  (Colombo/Dec05/2022)

 

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