Despite the global economic downturn the banking industry has performed outstandingly last year. The Central Bank has pursued strict regulation on the banking sector during the global economic meltdown. As a result there was not much impact on the banking sector of the country.
The banking, insurance and real estate sectors also contributed nine percent to the Gross Domestic Production (GDP), a senior official of the Central Bank told Daily News Business.
She said the entire banking system has maintained a fine liquidity, capital and profit ratio compared to the internal and external factors during the last year. There was a slight impact on the non-performing loans as the interest rates were high during that time. Since the Central Bank had to continue a strict regulation to have a minimal impact from the global economic downturn and with the reduction of the interest rates the Central Bank has noticed that there is a growth in loan repayments.
There will be more economic activities in the country with the positive economic environment.
The Central Bank has given approvals for over 100 new bank branches to open in the Northern and Eastern province to expand bank services.
It is important for banks to expand their services in rural areas or new banks to commence their operations targeting the rural community and to provide more access for credit, she said. She said that the financial market should approach the market with innovative products. The Central Bank is keen on novel products that suits to the customers needs, which are not commonly seen in the banking sector so that there will be competition among the banks and there would be healthy competition which would benefit all stakeholders in the industry.
The banking industry is adopting simple approaches of the Basel complaints to reach the advance level in a progressive manner.
Setting up of the mandatory deposit insurance scheme will enhance depositors confidence and it will be a self-corrective mechanism where companies would not have to take it as a burden.
This will also help to strengthen the financial system, the senior official said.