People’s Bank Sri Lanka: We are led by social responsibility, not profit
People's Bank has been always in the forefront of Sri Lanka's national development agenda, say N Vasantha Kumar and Deepal Abeysekera
Sri Lanka’s economy is undergoing a dramatic transformation, with infrastructure development and migration boosting the numbers. N Vasantha Kumar and Deepal Abeysekera from Sri Lanka’s People’s Bank discuss the good ratings coming out of the sector and the role that People’s Bank has played in the development of the country.
World Finance: Sri Lanka’s economy is undergoing a dramatic transformation, with infrastructure development and migration boosting the numbers. As a result the banking industry is strong with good ratings coming out of the sector.
With me now are N Vasantha Kumar and Deepal Abeysekera, from the People’s Bank to discuss.
Well Vasantha If I might start with you, what impact has the recent positive economic performance of the country had on the banking sector?
N Vasantha Kumar: In the recent past there has been a palpable change beginning from the presidential election held in January 2015. With that our rating by Fitch Ratings has been BB stable. So economic indicators are all showing good progress. So we in the banking sector have to go along with that.
So as a state bank, People’s Bank, we taking a major leading role in that aspect.
World Finance: And Deepal what role would you say the People’s Bank has played?
Deepal Abeysekera: People’s Bank has been always in the forefront of Sri Lanka’s national development agenda. Whether it comes to multiple development projects, supporting entrepreneurship, or developing industry.
We have been very focused on the national agenda of the country, either when it comes to disadvantaged and under-privileged communities, or small and micro industries. We have played a very, very major role in the past, because the very same reason why People’s Bank came into being, was to really strengthen the underprivileged sectors and to get their contribution to the national economy.
World Finance: N.Vasantha when it comes to risk management, what is your approach?
N Vasantha Kumar: Normally we do have a predetermined risk appetite, and we do not go in silos. We take the industry and how we impact on the industry, we take into consideration. And we have in our system the compliance and the risk, everything in a regulated framework, the IFRS and all those things.
So we go accordingly and also we take the risk to return basis in the industry. As a bank we have to think about why People’s Bank was established. So that focused we take the risk but also to go along with our business, vis-à-vis a focus on our strategy.
World Finance: Deepal you have a strong CSR programme – tell me about this?
Deepal Abeysekera: As I told you, the very reason why People’s Bank came into operation is really led by corporate social responsibility. There wasn’t a bank in Sri Lanka, but if you go and look back into the history, to do the banking in the native language, in Sri Lanka.
When we were established in 1961, we were the first bank to introduce chequebooks which could be transacted with the family language of the people. And from that point onwards, our entire operation was led by corporate social responsibility, not profits.
CSR per se, we look into three areas mainly: that is developing well-rounded personalities in children, that include their education, and extra-curricular activities.
We do support – in many ways – their education: scholarships and encouragement. And also we support the arts and culture, because national identities are really important for us to be at a very competitive nation in the world. And also the protection of our environment – we are in the forefront of introducing green banking in Sri Lanka.
World Finance: And moving forward, how do you see the banking sector evolving?
N Vasantha Kumar: The banking sector, as I mentioned earlier: Fitch Ratings has advised that the banking sector is very stable. So with that, the banking sector has been leading the economic growth in the country.
As we are concerned, major banks have a big role to play, and medium sized banks will face competition. But the very small sized banks, it is like they will find themselves in a difficult situation to read the market.
I think the banking sector… fortunately the growth is there. And most banks are now depending on deposits. But I think with this growth, financing all the infrastructure projects and things like that, banks might tend to go for borrowings may insure some bonds or something like that, a lot of chances for capital market improvement.
World Finance: Finally Vasantha, the banking sector in Sri Lanka still facing challenges. How you are approaching the call for better financial reporting in the country?
N Vasantha Kumar: In Sri Lanka we have standard reporting. And these are checked regularly by the audit firms, and by our regulator, the central bank.
And also we are following the IFRS standards. And in addition to that we are going for Basel II. So all in all, a very regulated framework is there.
World Finance: Vasantha, Deepal, thank you
Deepal Abeysekera: Thank you very much. Thanks.
N Vasantha Kumar: Thank you, thank you.