The Central Bank will use all available tools at its disposal to maintain financial system stability and it is committed to keep the deposits of the public safe from the economic and financial fallout of COVID-19 and similar unforeseen events, Central Bank Governor, Prof. W. D. Lakshman stated in a special statement released yesterday, June 7.
“The banking sector remains strong with total capital adequacy ratio above 16 per cent, net stable funding ratio above 130 per cent, liquidity coverage ratio above 175 per cent and statutory liquid asset ratio above 32 per cent. With these performance indicators, I do not think anyone needs an additional assurance on the current strength of the banking system, which accounts for 62 per cent of Sri Lanka’s financial sector,” the Governor said.
“Corrective regulatory action taken in respect of a few institutions does not mean that the entire non-bank financial institutions sector is in trouble. Therefore, I would like to urge the public not to be distracted or misled by baseless comments and malicious speculations expressing doubt about the health of our non-bank financial institutions sector as a whole,” he noted.
“In respect of the non-bank financial sector, the Central Bank message is the need for consolidation. The smaller should consider consolidating with the stronger. Sri Lanka has too many financial institutions given the size of its economy. We urge financial institutions to diversify their business models, particularly to support domestic production activity, rather than being driven purely by short term gains through financing imports and other business activities familiar to them,” the Governor also said.