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    Sri Lanka Financial System Presentation

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    shivakumar R
    The Central Bank of Sri Lanka plays a key role in maintaining the stability of the Sri Lankan financial system and economy. It was established in 1950 to accommodate the needs of the independent nation's dynamic economic and financial development. The Central Bank oversees 13 licensed commercial banks, 5 specialized banks, 38 licensed finance companies, and performs core functions like conducting monetary policy, managing foreign reserves, overseeing the financial sector, issuing currency, and more. Its objectives are maintaining economic and price stability as well as financial system stability to support sustainable growth.

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    Sri Lanka Financial System Presentation

    Uploaded by

    shivakumar R
    297 views21 pages
    The Central Bank of Sri Lanka plays a key role in maintaining the stability of the Sri Lankan financial system and economy. It was established in 1950 to accommodate the needs of the independent nation's dynamic economic and financial development. The Central Bank oversees 13 licensed commercial banks, 5 specialized banks, 38 licensed finance companies, and performs core functions like conducting monetary policy, managing foreign reserves, overseeing the financial sector, issuing currency, and more. Its objectives are maintaining economic and price stability as well as financial system stability to support sustainable growth.

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    The Central Bank of Sri Lanka plays a key role in maintaining the stability of the Sri Lankan financial system and economy. It was established in 1950 to accommodate the needs of the independent nation's dynamic economic and financial development. The Central Bank oversees 13 licensed commercial banks, 5 specialized banks, 38 licensed finance companies, and performs core functions like conducting monetary policy, managing foreign reserves, overseeing the financial sector, issuing currency, and more. Its objectives are maintaining economic and price stability as well as financial system stability to support sustainable growth.

    Copyright:

    Public Domain
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    297 views21 pages

    Sri Lanka Financial System Presentation

    Uploaded by

    shivakumar R
    The Central Bank of Sri Lanka plays a key role in maintaining the stability of the Sri Lankan financial system and economy. It was established in 1950 to accommodate the needs of the independent nation's dynamic economic and financial development. The Central Bank oversees 13 licensed commercial banks, 5 specialized banks, 38 licensed finance companies, and performs core functions like conducting monetary policy, managing foreign reserves, overseeing the financial sector, issuing currency, and more. Its objectives are maintaining economic and price stability as well as financial system stability to support sustainable growth.

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    INDIAN FINANCIAL SYSTEM:-

    Presentation of
    SRI LANKA FINANCIAL SYSTEM

    By
    SHIVAKUMAR R
    TMB197975
    T John Institution of Management and Science
    Overview

    Financial System Stability is one of the main objectives of the Central Bank. A stable
    financial system is capable of mobilizing savings and allocating them to productive
    investments, managing risks and settling payments, without materially affecting economic
    growth and welfare of the people even during economic shocks and stressful circumstances.
    This helps to create a favorable environment for efficient financial intermediation to promote
    investment and economic growth.
    The Bank's Beginning

    To accommodate dynamic economic and financial system developments upon gaining independence
    in 1948, the post-independence Government of Ceylon (as Sri Lanka was then known) established the
    Central Bank of Ceylon to maintain an active monetary policy regime and a dynamic financial sector
    to support and promote economic growth.

    Prior to the establishment of the Central Bank, the Currency Board System set up under the Paper
    Currency Ordinance No.32 of 1884 functioned as the country’s Monetary Authority, though very
    narrow in its capacity. This system was deemed inadequate for a developing country upon gaining
    political independence.

    Technical expertise to establish a central bank was sought from the United States of America (USA) in
    July 1948, with Mr. John Exter, an American economist from the Federal Reserve of USA being
    appointed to carry out this task.
    Dr. Indrajith Coomaraswamy Arjuna Mahendran Ajith Nivard Cabraal Deshamanya Sunil Mendis
    2016 - 2019 2015 – 2016 2006 - 2015 2004 - 2006

    John Exter
    1950 - 1953
    (Founder Governor)

    Past Governors
    A S Jayawardena H B Dissanayaka Dr. H N S Karunatillake Dr. W Rasaputram
    1995 – 2004 1992 - 1995 1988 - 1992 1979 - 1988

    W Tennekoon Sir Arthur Ranasinghe N U Jayawardena


    H E Tennekoon 1953 - 1954
    1967 - 1971 1954 - 1959
    1971 - 1979
    D. W. Rajapathirana
    1959 - 1967
    The objectives of the Central Bank as specified in the MLA in 1949 were:

    ❑ The stabilization of domestic monetary values (maintenance of price stability).


    ❑ The preservation of the par value or the stability of the exchange rate of the Sri
    Lankan Rupee (maintenance of exchange rate stability).
    ❑ The promotion and maintenance of a high level of production, employment and
    real income in Sri Lanka.
    ❑ The encouragement and promotion of the full development of the productive
    resources of Sri Lanka
    Vision

    “A credible and dynamic central bank contributing to the prosperity of Sri Lanka.”

    Mission

    "Maintaining economic and price stability and financial system stability to support sustainable growth through
    policy stimulus, advice, commitment and excellence.”
    Sri Lanka Coins
    Sri Lanka Notes
    Financial System of Sri Lanka

    i. The financial sector asset base stood at Rs. 7,651.8 billion or US$67.1 million, and is
    approximately 117.8 percent to Gross Domestic Product (GDP) as at end 2011. The
    financial system in Sri Lanka is dominated by the banking sector with 55 percent of the
    assets of the financial system concentrated in the banking sector. The contribution of the
    banking, insurance and real estate accounts for 8.8 percent of GDP. The banking sector
    assets accounted for Rs. 4.9 trillion as at September 2012.
    ii. Sri Lanka’s GDP is to reach a US$100 billion economy by 2016. The assets of the
    banking sector are expected to double by 2016 to reach Rs. 10 trillion in view of the
    expected doubling of per capita income to US$4,000 by 2016. With a view to facilitating
    such growth, banks were required in 2010 to increase the minimum capital aligned to Tier
    I capital on a staggered basis.
    Role of the Central Bank in Maintaining Financial System:

    • Promoting and maintaining public confidence in money.


    • Promoting safety and soundness of individual financial institutions.
    • Ensuring public confidence in financial system, in collaboration with other financial
    regulators, through minimization of risks to the financial system.
    • Acting as lender of last resort.
    • Resolving failing financial institutions in a manner that minimizes possible adverse
    implications of such an event on the overall financial system/economy.
    • Regulating and supervising financial market infrastructure
    Objectives
    Objectives of Central Bank of Sri Lanka (CBSL)
    The CBSL's focus and functions have evolved since its formation, in response to the changing
    economic environment. In keeping with trends in central banking, the objectives of the CBSL were
    streamlined by amending the Monetary Law Act (MLA) in 2002, to enable it to pursue its two core
    objectives and to free it of the multiple objectives that were originally assigned to it.
    The Central Bank has two core objectives:

    ➢ "Maintaining economic and price stability“


    ➢ "Maintaining financial system stability"
    Central Bank (1)
    ▪ Central Bank of Sri Lanka

    Licenced Commercial Banks (13)


    • Amana Bank • MCB Bank Ltd
    • Bank of Ceylon • National Development Bank PLC
    • Bank of china Limited • Nations trust Bank PLC
    • Cargills Bank Limited • Pan Asia Banking corporation PLC
    • Citibank N.A. • People’s Bank
    • Commercial Bank of Ceylon PLC • Public Bank Berhad
    • Deutsche Bank AG • Sampath Bank PLC
    • DFCC Bank PLC • Seylan Bank PLC
    • Habib Bank PLC • Standard Chartered Bank
    • Hatton national Bank PLC • State Bank of India
    • ICICI Bank • The Hong Kong and Shanghai Banking
    • Indian overseas Bank Corporation Ltd(HSBC)
    • Union Bank of Colombo PLC
    Licensed Specialised Banks (5)

    • Housing Development Finance Corporation Bank of Sri Lanka (HDFC)


    • National Saving Bank
    • Regional Development Bank (Pradheshiya Sanwardhana Bank) (RDB)
    • Sri Lanka Savings Bank Ltd (SLS Bank)
    • State Mortgage & Investment Bank (SMIB)
    • Sanasa Development Bank (SDB Bank & U pay)
    Licenced Finance Companies (38)
    • Saantham Market Private Limited • Kanrich Finance Ltd.
    • Abans Finance PLC • L B Finance PLC
    • Alliance Finance Co. PLC • LOLC Finance PLC
    • AMW Capital Leasing and Finance PLC • Melsta Regal Finance Ltd.
    • Arpico Finance Co. PLC • Mercantile Investments & Finance PLC
    • Asia Asset Finance PLC • Merchant Bank of Sri Lanka & Finance PLC
    • Associated Motor Finance Co. PLC • Multi Finance PLC
    • Bimputh Finance PLC • Nation Lanka Finance PLC
    • BRAC Lanka Finance PLC • Orient Finance PLC
    • Central Finance Co. PLC • People's Leasing & Finance PLC
    • Central Investments & Finance PLC • People’s Merchant Finance PLC
    • Citizens Development Business Finance PLC • Richard Pieris Finance Ltd.
    • City Finance Corporation Ltd. • Sarvodaya Development Finance Co. Ltd.
    • Colombo Trust Finance PLC • Senkadagala Finance PLC
    • Commercial Credit & Finance PLC • Serendib Finance Ltd.
    • Commercial Leasing & Finance PLC • Singer Finance (Lanka) PLC
    • ETI Finance Ltd. • Sinhaputhra Finance PLC
    • HNB Grameen Finance Ltd. • Siyapatha Finance PLC
    • Ideal Finance Ltd • Softlogic Finance PLC
    • Summit Finance PLC
    • Swarnamahal Financial Services PLC
    • The Finance Co. PLC
    • The Standard Credit Finance Ltd.
    • TKS Finance Ltd.
    • Trade Finance & Investments PLC
    • U B Finance Co. Ltd
    • Vallibel Finance PLC
    Functions of Central Bank of Sri Lanka (CBSL)

    1. Core Functions
    2. Agency Functions

    Core Functions
    (a) Conduct of Monetary Policy
    (b) Conduct of Exchange Rate Policy
    (c) Management of the Official International Reserves
    (d) Oversight of the Financial System
    (e) Licensing, Regulating and Supervising of Banks and Selected Non-Bank
    Financial Institutions
    (f) Provision of Settlement Facilities and the Regulation of the Payment
    System
    (g) Issue and Distribution of the National Currency
    (h) Compilation, Dissemination and Analysis of Economic Data and Statistics
    (i) Banker to the Government and its agencies, and provision of current
    account facilities to LCBs and non-commercial bank Primary Dealers for
    Government Securities
    Agency Functions

    (a)Management of the Public Debt


    (b)Foreign Exchange Management
    (c)Fund Management and Custodian of the Employees’ Provident Fund
    (d)Facilitating Financial Inclusion
    (e)Financial Intelligence services to prevent, detect, investigate and prosecute
    Money Laundering and Terrorist Financing
    Structure of financial services sector
    Financial service sector

    Informal sector Formal sector

    Money lenders Central banks

    Friends and relatives Banks

    Consumption credit from retail shops Commercial banks Specialized banks Rural bank Thrift and
    Credit Co-
    Private banks Govt banks operatives
    Other informal credit
    Foreign domestic

    Finance companies

    Leasing companies

    Primary dealers

    Contractual saving institution

    Provident funds Insurance companies

    Venture capital Unit Trusts Money Brokers Other Institutions


    Constituents of the Financial System and
    Share of Assets, as at 31 Dec. 2012

    4.4% Column2
    3.4% 13.9%

    17.1%

    Center bank of sri lank


    Banking Institution
    Non-Banking Financial Institution
    1.2% Other Deposit-taking Institution
    Contractual Saving Institution

    4.6% Insurance Companies


    Other Financial Institution

    55.6%
    Conclusion

    Therefore it can be conclude that a good visionary leadership may guide the
    Sri Lanakan banking industry towards shared ATM networks. Finally if the
    government back up is there this can be continued or build up to a national
    ATM network.
    Thank You

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