The banking sector of Sri Lanka is resilient and has withstood the challenges of the evolving internal and external environment, a senior Central Bank (CB) official said.
“We have witnessed worse times during the past ten years and it is commendable to note that the country’s banking sector withstanding the challenges of the global financial crisis and the economic downturn. Sri Lanka’s banking sector has a strong risk management mechanism,” Central Bank of Sri Lanka Assistant Governor Yvette Fernando told guests at a public-private dialogue on the theme overcoming the regulatory and compliance challenges in the banking sector, organised by the Ceylon Chamber of Commerce in Colombo last week.
Advanced technology has made the systems strong and this also has effectively supported by the regulatory system in taking corrective action. We have ensured that regulatory measures are adhered to the given time frame and target dates, she said. “Overall the banking sector has withstood the challenges effectively. We have ratios to ensure the smooth functioning of the banking system and all the banks have adhered to these requirements. The non performing loan (NPL) ratio is relatively low among the banks. However, there can be certain banks which are below the mark,” she said.
The board of management of a bank needs to know what is happening in the bank. Therefore, risk management is very important in this regard, she said.
“The compliance culture will definitely help the bank and proactively taken action to meet these requirements will have far reaching benefits to the banks. In the compliance process, accountability and corrective action is essential to ensure required levels are met .The banks should operate within a risk management framework,” she said.
While technological developments are necessary for the bank to move forward, it is also important to have a time plan to mitigate the risk of technology. However, technology has become the way forward for the banking sector which is highly dependable on this tool and all measures should be taken to prevent misuse of technology in the sector, she said.