JAFFNA -- The Central Bank said this week that unclaimed funds left with banks, even over 10 years ago, by people of the North, can be re-claimed by account holders.
Residents in Jaffna say that large amounts of funds, deposited with commercial banks in Jaffna, were transferred to the Central Bank after the outbreak of war. This was because thousands of account holders were displaced and private commercial banks also fled Jaffna during the fighting.
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Central Bank Governor Ajith Nivard Cabraal with Colombo business leaders in Jaffna. (Above) a view of the town. |
“Under the law, when money is left unclaimed for over 10-years, commercial banks transfer these funds to the Central Bank, for safe keeping. But if anyone goes back to their bank, even after 10-years, the bank can return the money to the owner. So the money is safe, anyone can re-claim their money even now,” said the Governor of the Central Bank, Ajith Nivard Cabraal, speaking at the Vembadi Girls High School in Jaffna, on Tuesday. The governor was responding to a question raised by a school girl about lost money belonging to people of the Northern Province.
Unblocking cash flows
The Central Bank also asked commercial banks, to go easy on lending criteria, such as collateral requirements, for loans to Northern residents. By now all the state commercial banks and some private banks have returned to Jaffna.
“We are asking banks not to lay down the same level of stringent conditions on lending, as in other parts of the country, because these people are emerging from years of conflict. Their needs must be met fast and in the required amounts. So the banks must develop schemes to be able to do that,” said Mr Cabraal, at the opening of a Sanasa Development Bank branch in Jaffna town, also on the same day. The Sanasa Bank – that works with the cooperative movement in Sri Lanka - says it will focus on grassroot funding in the North. There is already a demand for this type of micro credit with thousands re-settling and trying to start small-scale livelihoods.
“We are looking at lower rates for Jaffna, than in other parts of the country. Our priority of course will be grassroot level lending for SME (Small and Medium Enterprises) and micro finance. Jaffna already has fisheries and farmers’ associations. Our agents will also visit villages and help communities form groups and organise saving-and-lending cycles. In addition, we will also offer corporate loans and leasing facilities,” said the General Manager and CEO of Sanasa Development Bank, Nimal Mamaduwa.
DFCC Bank and its retail-banking arm, DFCC Vardhana Bank, also opened a branch in Jaffna town on Tuesday. DFCC Bank, which specialises in long-term project financing to the private sector, is looking at emerging industries and services in the North.
“We are looking at capturing 10% of the business population in Jaffna. We already have six credit schemes funded by donors like the ADB, the World Bank, JICA and also the Central Bank. So we will lend at lower rates for Jaffna, for value added industries and services,” said Senior Vice President of SME and Branch Banking at DFCC, Ananda Kumaradasa.
At this point, demand for credit in Jaffna is mainly micro scale, but the banks expect a gradual demand growth by businesses as economic activities expand.
Jaffna tours
Meanwhile, in the immediate short term, tourism is seen as a prime employment and money generator in Jaffna, suitable for households as well as businesses.
Already, since the official end of war in May 2009, domestic tourism has taken off. Visitors are flowing into Jaffna from other parts of the country. Some are on pilgrimage to the holy sites in the North, but many come simply to ‘see’ the historic town of Jaffna, after nearly 30 years of being cut off from the rest of the country.
“Over the last few weeks alone, large numbers came to Jaffna and more want to come, but they have no places to stay. So there is a lot of potential for tourism services in Jaffna. Immediately, to meet the demand, we can lend to people to convert a few rooms in their houses into small guest houses,” said Mr Mamaduwa.
The signs that Jaffna has re-connected with the rest of Sri Lanka are unmistakable. A few hours into the morning and the Jaffna Central Bus Stand is bustling. The streets are crawling with vehicles – the latest cars mixing with Jaffna’s trade mark peddle bicycles and scooters. Patches of road-side have been taken over by hawkers and shops line the streets that are beginning to resemble Colombo’s busy Pettah area – although far less dirty and less disfigured by election posters.
Some shops even remain open till 10.00 – 11.00 in the night, compared to a few months ago when everything shut down by 6.00 in the evening. “Things have changed overnight in Jaffna. At this point, in Jaffna town itself, the number of people from other parts of the country might be more than the number of people from Jaffna. Now that the roads are open they are all coming to see Jaffna,” said a young police officer standing by a road-side in Jaffna town.
Jaffna’s cost of living is also coming under control. Shop keepers say essential goods are sold at the same price, or almost the same rates, as in other parts of the country. There is also no shortage of goods. |