Find Banking and Financial Services expertise in Sri Lanka
Sri Lanka’s financial services are a key sub sector in an economy where the services sector contributes 60% of GDP (2010). The financial sector has also been one of the fastest growing segments of the economy. Services offered by the sector include commercial banking, insurance, pensions and provident funds, investment banking and many financial intermediary functions. The sector is dominated by a sound, modern banking system that accounted for 54% of the financial sector’s assets in 2009. The system consists of over 30 banks, the majority of which are licensed commercial banks with the remainder being licensed specialised banks. In 2010, two of the commercial banks were state owned, nine were owned by private domestic companies and the rest were foreign owned.
Regulation of Financial Services
All banks operating in the country must be licensed by the Central Bank of Sri Lanka, which is responsible for the regulation of the country’s financial sector. The Central Bank regulates under the framework of the Banking Act, the Monetary Law Act and the Exchange Control Act. Supervision under the Bank Supervision Department is based on the internationally accepted standards set out by the Basel Committee for Banking Supervision. The Central Bank is responsible for the licensing of commercial and specialised banks, comprising savings and development banks. Both are permitted to engage in foreign exchange, although specialised banks are subject to the Central Bank’s approval in this. In addition to these responsibilities, following a modernisation programme set out in 2000, the Central Bank of Sri Lanka’s main focus was on the use of technology within the banking sector and on maintenance of financial and price stability. The banking and finance sector is solid; Sri Lanka ranks 27th out of 144 countries worldwide for soundness of banks and scores above the world mean according to the World Economic Forum’s Global Competitiveness Report (2012-2013).
Development of Financial Services
The World Bank’s Ease of Doing Business Index (2011) places Sri Lanka 2nd out of eight countries in the South Asian region in overall ease of doing business, a strength which is mirrored in relation to protecting investors where it comes 3rd, equalling with India. Its position with regard to getting credit is moderate coming 4th, in between India and the Maldives. The World Economic Forum’s Global Competitiveness Report (2012-2013) places Sri Lanka in a healthy 33rd position out of 144 countries in terms of availability of financial services. The affordability of these services is also good with a score of 5.0 (out of a possible 7), which put Sri Lanka above the world mean. These high rankings are reflected in inclusivity of financial services which shows that 69% of adults (aged 15 and over) hold an account with a formal financial institution. With regards to ease of access to loans, the World Economic Forum reports that Sri Lanka scores 2.6, below the world mean of 2.9. In 2011, 18% of adults had taken out a loan from a financial institution within the last year. Sri Lanka is one of the easiest places in the world to raise finance through the issuing of shares, with the country coming 2nd out of 144 countries.
|Banking and Financial Services organisations in Sri Lanka|
|Central Bank of Sri Lanka||