People’s Bank on Sri Lanka’s strong growth

Sri Lanka is putting its war-ravaged image behind it and going from strength to strength, with People’s Bank positioning itself at the forefront of the country’s banking industry

November 7, 2014

Sri Lanka now has an economy of $67bn, which is expected to double by 2020. World Finance speaks to Piyadasa Kudabalage, Gamini Senarath and Vasantha Kumar from People’s Bank about how the banking sector is developing.

World Finance: Well Vasantha, if I might start with you, how developed is the banking industry in Sri Lanka and what challenges does it face?
Vasantha Kumar: If we look at Sri Lanka’s GDP growth, it’s well above the global and regional average growth for the last five years. It indicates the banking sector’s contribution towards the economy. However, in our country the banking sector has grown faster than the economy. Ours is a transitional economy, debt-capital based country, but our developed capital market does not develop. However, our treasury bonds and treasury based market, we have a very vibrant market there. The banking sector has played a vital role in developing the capital market. In the development context, the banking sector has taken an active role there. In our country we are seeing a growing middle-income economy, so aspirations are changing, and we are seeing a faster growing ageing population, so the banking sector has to identify that and present innovations to meet the needs of the varied population.

World Finance: Gamini over to you now, and how is People’s Bank positioned in Sri Lanka, and how have you adapted to client needs?
Gamini Senarath: There’s been at the forefront, taking banking from the cities to the villages for more than five decades, and currently we have a 13bn customer base, that is the largest in the country. Our customer retention rate is nearly 77 percent, it is very high. That itself shows that we continue to adapt to customer needs over the period of time. We have the largest saving base in the country, and we have the largest branch network in the country. We have more than 736 branches and over 420 ATM machines all over the island. We have one of the most expansive correspondent banking networks all over the world, over 150 corresponding branches, serving more than one million Sri Lankans who are living abroad.

We have the largest saving base in the country, and we have the largest branch network in the country

World Finance: So Piyadasa, one of the services that People’s Bank offers is development banking. What exactly is this and how does it aid the development of Sri Lanka?
Piyadasa Kudabalage: Initially we extended our services to the micro-finance sector and we make them part and parcel of the banking sector environment. We made them freely accessible to the bank. The second stage, we developed the SME sector, we are that mass population in the country, it is involving medium level business enterprises. So yet again, we thought that with this current scenario that the country’s developing rapidly. Our growth rate is the highest in the region. Now we extend our financial facilities to the mega projects and the corporate sector.

World Finance: Well Vasantha, bank to you now, and how do you see the banking industry growing in the country?
Vasantha Kumar: Over the past years, various challenges emerged in the industry across the globe, but Sri Lanka remained resilient. It continued its growth trajectory. Our regulators were also vigilant, resulting in continued growth and to weather any storms. Sri Lanka is surpassing 7500 per capita income by 2020. To the banking sector it has set up various targets. For example, to bring down the poverty below one percent, and the unemployment below three percent.

World Finance: Finally Piyadasa, what’s next for the People’s Bank?
Piyadasa Kudabalage: The Sri Lankan banking sector getting consolidated to absorb more shocks coming and growing in the segment. We still believe that, while we extend our services to the corporate sector, we can develop micro-finance and the SME sector. That will be ultimately the backbone of the economy. We have not forgotten our original mandate where we had to make accessibility to the banking sector to the ordinary nationals of our country. So having that in mind, we extend our banking services to meet the needs of the day. We are developing our IT platform to be more efficient in times to come. We develop our key players in the bank to be more efficient in the financial environment. We do our best for the country by taking the responsibility to be part and parcel of the development drive.

World Finance: Gentlemen, thank you.