Deposits in banks reached Rs.7 trillion in 2016 from Rs.2 trillion in 2009:CB
View(s):The value of deposits in Sri Lanka’s banking system rose to Rs.7,399 billion (Rs.7.4 trillion) in 2016 from Rs.2,232 billion in 2009, latest Central Bank (CB) data shows.
In an April 2018 circular on guidelines on opening new banks in Sri Lanka, the CB has provided details of advances, deposits and other financial data like total assets of the banking system.
A senior CB official said that the circular was an update of existing regulations pertaining to the opening of new banks. In the past year, the new openings was the Bank of China as a fully-fledged commercial bank and a representative office of Doha Bank.
“One other party has sought to open a bank and has had preliminary discussion,” the official said.
Under “assets”, the banking sector represented 58.8 per cent of the total assets of Rs. 9,046 billion in 2016, up from 58.1 per cent (Rs.6,971 billion) in 2014. Of these, assets of licensed commercial banks (LCBs) rose to Rs. 7,843 billion from Rs. 5,884 billion (in the same two years) while in the case of assets of licensed specialised banks (LSBs), it marginally rose to Rs.1,203 billion from Rs. 1,087 billion.
In the case of “Contractual Savings Institutions” assets, the Employees Provident Fund (EPF) saw a marginal rise to Rs. 1,842 billion in 2016 from Rs. 1,487 billion in 2014 while insurance companies’ assets were up at Rs.503 billion (vs. Rs. 414 billion) and Employees Trust Fund (ETF) at Rs.249 billion (vs. Rs. 199 billion).
Assets of primary dealers, who were in the public domain after the phenomenal and unscrupulous rise of Perpetual Treasuries Ltd (PTL) which cost the Government millions of rupees in lost income, was reported at Rs. 195 billion in 2014, rising by nearly 50 per cent to Rs.283 billion the following year and easing to Rs. 264 billion in 2016. The years 2015-2016 were when PTL reported extraordinary profits.
Assets of licensed finance companies rose to Rs.1,112 billion from Rs.743 billion while insurance companies rose to Rs.503 billion from Rs.414 (in 2014).
The CB update said that the banking system dominates the financial system with an asset base of over Rs. 10 trillion and accounting for around 60 per cent of the total assets in the financial system.
The banking sector consists of 33 banks, out of which 26 are LCBs (two state banks, 11 domestic private banks and 13 foreign banks) and seven are LSBs (six state banks and one private bank).
It said the number of banking outlets and ATMs operated by the banking sector was around 7000 and 4000, respectively, whereas the banking density (branches only) per 100,000 persons was 17 during recent years.
“Consideration (in opening new banks) is given to the specific benefits such as innovative banking facilities, new technology, creation of employment opportunities, new financial instruments, extension of services to the unbanked or under-banked areas etc. that would accrue to the country. The CB should satisfy itself that the proposed bank would be in a position to provide some value addition to the financial system of the country by offering enhanced financial services,” it said.
Also noted was that: “Promoters (of new banks) are requested to refrain from employing persons who hold positions of strategic importance in existing banks, as recruitment of such persons would be detrimental to the smooth functioning of those banks.”