Financial Times

Grameen bank concept to develop the banking sector
By Duruthu Edirimuni
If Sri Lanka gets the Grameen bank concept right, the banking sector will show a tremendous growth potential, according to a regional banking expert.
“Micro finance or the Grameen banking concept, which is similar to conventional banking, will furnish livelihoods to self help groups and trigger a cycle by attracting funds from the hinterland,” Naina Lal Kidwai, deputy chief executive officer, HSBC India told The Sunday Times FT last week.

She said that micro finance or the Grameen bank concept that Bangladesh has successfully implemented can mobilise the growth in the villages in this part of the region, which will grow banking. She explained that almost all such groups consist of women, who feed a family and save. “Gradually they become empowered and eventually will start to spend in the rural areas. This cycle is what will pull funds from the villages and trigger growth in the rural areas that will ultimately grow banking,” she said.

Kidwai, in Colombo to address a breakfast meeting organized by HSBC, said that Sri Lanka should strive to replicate the IT boom that India has seen. She said that more than IT enabled services such as business process outsourcing and the call centres, which need large volumes of people and stability in the country, Sri Lanka should promote IT services such as software development, because the country has skilled and technically competent labour.

“The good news is that the US is looking up and wants to outsource their IT services more and more and that is an opportunity for a labour force equipped with English and a good education, because Sri Lanka is an attractive destination as an offshore base for IT services,” Kidwai said.

She added that there is further room for both (India and Sri Lanka) to capitalise from the free trade agreement (FTA). “The FTA opens doors wider to trade, because the investors have a wide range of choices such as the commodity sectors, financials, manufacturing and healthcare,” she said.
She said that there is more scope for Sri Lanka to attract tourists from India, because the outbound travel from India is growing rapidly.

Encouraging more economic collaboration between the two countries, Kidwai said there is tremendous potential for Sri Lanka to service the south Indian markets, because of the distance factor. “For instance, it takes four days for goods to reach Chennai from Delhi, but only two days from Sri Lanka,” she added.

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