Business Times

Don’t mop up Jaffna deposits

A top banker has urged his counterparts to not only set up shop and mop up the deposits in the Northern peninsula, but plough a reasonable amount of monies into this area to uplift the economic standard of its people if not he warned , the inequalities wll never be bridged.

"There has been a surge to open branches in the North and East. But the idea is not to open shop and mop up all the deposits to be brought to Colombo. There has to be commitment or legislation to ensure that a certain percentage of the deposits are redeployed in those areas. If this does not happen there would not be equitable growth," Rajendra Theagarajah, Managing Director HNB told an investor forum organised by C T Smith Stockbrokers in Colombo recently.

He said that there have been some proposals to the Central Bank with regard to this and that the regulator is very supportive. “Legislation pertaining to this is slated to be passed soon, which is the way forward,” he told the Business Times on the sidelines of the forum. He said that HNB and some other banks are in favour of such a law.

“The government has created the space (by winning the war) for firms to forge ahead with their businesses. Now we (firms) must win the North." He also called banks to go for cash flow based lending instead of the asset backed lending (with collateral) that they are so used to. "If a man has a single cow, he cannot purchase another which could increase his income because he has no collateral to place as security when borrowing from a bank."

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