With the unprecedented outbreak of the Covid-19 pandemic, all most all the economies have been jeopardised in multifaceted means.
Even the mighty economic power houses around the globe felt the pain, it is no point of exaggeration, how much the pandemic hindered the emerging economies including Sri Lanka.
With the objective of revamping the affected businesses by the Covid-19 pandemic, the CBSL, in consultation with the Government of Sri Lanka, has initiated various contemporary measures to the economy considering the turbulent situation and constraints of repayment arisen with the pandemic.
The Bank of Ceylon, being the No 1 Bank and premier State Bank has been in the forefront in executing the relief packages and introducing novel digital banking products to uplift the entire economy and realising the aspirations of citizens of Sri Lanka.
Standing tall as a pillar of support to its valuable clientele with unwavering support, the Bank has established a revival unit with a prime objective of reinforcing the collapsed or disrupted businesses considering as a timely additional support during the pandemic situation.
Also the bank has profoundly realised the needy sectors and came up with innovative banking products and services to address such needs and our effort today is to make a foot note of such another significant service introducing to the entire economy.
Overview of performance
As correlated with the global impact, Sri Lanka’s external sector endured a major contraction in 2020 with the outbreak of the pandemic, stimulating contemporary policy measures by the Government and the Central Bank.
Merchandise exports declined sharply in the months in which the spread of the virus and the resultant containment measures were more intense, but reached close to the pre-pandemic levels sooner than expected.
It is learnt that in response to the policy measures taken by the Government to restrict most non-essential imports and low crude oil prices, merchandise imports reported a significant decline in 2020.
The combined effect of the gradual recovery in earnings from merchandise exports and the continuous decline in expenditure on merchandise imports resulted in the trade deficit to contract notably to record the lowest trade deficit since 2010.
As per the information depicted in the Annual Report 2020 of the Central Bank of Sri Lanka (CBSL) Earnings from merchandise exports were severely impacted during the months in which containment measures were more intense with the spread of the Covid-19 pandemic, but recovered towards the pre-pandemic levels faster than expected.
As per the CBSL sources, agricultural exports registered a decline in earnings of 5.1 percent in 2020 compared to 2019, due to weaker earnings from tea, seafood and unmanufactured tobacco, while earnings from spices, coconut, minor agricultural products, rubber and vegetables increased.
Agricultural exports such as cinnamon, pepper, dried vegetables, arecanuts, coconut oil and fibres and natural rubber registered increases in earnings during the year, mostly driven by higher volumes.
Industrial exports registered a broad-based decline in earnings, with an overall reduction of 18.6 percent in 2020 compared to 2019.
The export of textiles and garments, the single largest export of Sri Lanka, registered a decline in earnings of 21.0 percent in 2020. As per the latest records pertaining to External Performance published by the Central Bank of Sri Lanka, the trade deficit widened on a year-on-year basis for the third consecutive month in May 2021 to US$ 716 million, compared to USD 407 million recorded in May 2020.
It is notable that exports have been resurging as usual amidst many challenges and shown a positive growth.
Earnings from merchandise exports increased to US$ 892 million in May 2021, recording growth rates of 52.0 per cent and 9.0 percent over May 2020 and April 2021, with higher earnings from all major sectors.
Leading to fulfil its national duty
In this backdrop, with the objective of thriving the Sri Lankan export industry and to recuperate the export sector during the present global recession, Bank of Ceylon, being the leading banking institution which provided the highest trade finance facilities to its export clientele has navigated its business to another height through new service brand “BOC export circle”.
Exports are incredibly important in terms of earning of foreign exchange to the country.
As such, this is a yet another milestone in BOC journey to reinforce one of the imperative segments in the economy through the “BOC Export Circle” which is a fully fledged One-Stop Export Unit locates at 2nd floor, Bank of Ceylon, Head Office.
The availability of adequate finance and end to end advisory services throughout the supply chain are fundamental requirements for the growth of this sector.
Therefore, the prime objectives of setting up the BOC Export Circle are to provide financial assistance, end to end advisory services specially to SME export customers, to facilitate the revival of the export sector which hindered by Covid-19 pandemic and to attract potential export oriented customers through a comprehensive export credit package.
The circle will be launching under a unique brand name and introducing of new deposit products and new loan schemes exclusively designed for exporters.
In line with fiscal policy initiatives of the Government with regard to revival of the economy, loan schemes will be introduced particularly target at direct and indirect exporters.
The bank has identified the timely requirement to introduce a specific financing scheme solely for working capital requirements to the export oriented customers.
Pre shipment facilities such as Packing Credit Loans in LKR and USD Terms and Post Shipment facilities such as LC Bill Negotiation, Export Collection Bill Purchases, Bill Purchases under Open Account basis in Foreign Currency terms will be availed to meet the working capital requirements of direct exporters.
Based on their annual turnover and number of years in operations with regard to Start-ups and Small and Medium (SME) Sector exporters are considered for the quantum of the facility.
In order to cater to indirect exporters who supply raw materials, packing materials, finished goods or providing infrastructure facilities or any other facilities and services to direct exporters, specially designed credit facilities such as revolving short term loans and local LC bill discounting facility will be introduced through “BOC Export Circle”.
Additionally, the Bank has arranged a Trade Information Desk to provide end-to end supply chain information to the exporters and export related advisory services to the existing and potential customers of the bank. Assistance for business registration and related services, creating new business alliance with Export Development Board and Ceylon Chamber of Commerce, Sri Lanka Export Credit Insurance Corporation to penetrate SME export market and arranging link between prospective customers and export related organisations are inter-alia of other services availed in the Export Circle. The above-mentioned loan schemes are implemented BOC Branch network islandwide.
However, it is intended to operate the credit schemes preliminary in selected branches and will be moving to the other branches gradually in time.
As the Bank gears up for 2021 as the leading financial institution, Bank of Ceylon has proven its resilience particularly in trying times with the global pandemic.
The bank emerged as the best financial provider under Saubhagya concessionary loan schemes and extended moratoriums in order to fulfill the aspirations of the business community in Sri Lanka while owing to robust asset base amounting to more than three trillion asset base.
The Bank of Ceylon has entered into an agreement with Asian Infrastructure and Investment Bank (AIIB) under “Covid-19 Crisis Response Facility” for granting a special credit support scheme for Corporates and Small and Medium sized Enterprises (SMEs) affected by economic upheaval due to the Covid-19 pandemic with a view to reinforce and pump additional liquidity to the affected businesses.
The Bank of Ceylon has been nurturing the new entrants to the solid giant business entities by providing assistance in needy time from its inception through the long journey of more than eight decades in Banking Industry. Being the bed rock of most successful business stories and the pioneer in accelerating the economy in all times, we firmly believe BOC Export circle concept would be addressing such a responsible duty to the entire economy right on time.
As one of the region’s most vibrant export hubs, Sri Lanka is equally competent in agriculture, manufacturing and service sector.
The rest of the world has the opportunity to benefit from the country’s collective competitive advantage through sourcing from Sri Lanka.
Throughout the years Sri Lankan products have gained a strong reputation worldwide for ethical manufacturing of high-quality products trusted by the iconic global brands.
The young Sri Lankan entrepreneurs who are enriched with multi-talented skills are set back in progressing due to lack of resources and financial support. As a premier banking partner, our sole endeavour is to pave way for the beginners of export market to step into the global business arena and to revamp and reshape the landscape of the entire economy in the long run.
Nihal Surawimala is currently steering the Corporate and Offshore Banking Division of Bank of Ceylon as the Senior Deputy General Manager (Corporate and Offshore Banking) who is a senior Banker counting over 30 years experience in both local and international banking arenas.
Surawimala holds a Bachelor’s (Special) Degree in Public Administration and Master of Science (M.Sc) in Management specialising in banking and finance, both from the University of Sri Jayewardenapura. Also he is an Associate Member of the Institute of Bankers of Sri Lanka.