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by Chandani Jayatilleke

The State Mortgage and Investment Bank (SMIB) which is known as the housing bank of the nation aims to retain its position despite increasing competition from the other banking institutions in the country.

The bank has issued 10,000 housing loans to the value of Rs. 1.4 billion in 2002, a significant increase over the previous year. "We plan to top this number this year with more than value addition in our banking loan schemes to retain our position," Bank's Chairman, Joe Rajakaruna, an attorney-at-law told the Daily News in an interview.

However, the exact figures of last year's financial performance were not available at the time of the interview.The bank maintains a favourable 95% loan recovery rate. "We have not had the problem of carrying Non Performing Loans (NPL) in our books," he said.

"Our market segment is low and middle income group and this segment basically repay their instalments in time," he said.

He hoped that the current economic and political developments in the country will foresee a major change and increased growth in many sectors in the economy including the construction sector. "The SMIB strives to harness the benefits of such an economy and contributes its share to the development process. Our presence in the housing loan market is a necessity for this development drive," he said.

Improved services

Rajakaruna said that his staff is aware of the competition in the market.

"Therefore, we have mapped out ways to improve our services with low margins and build a huge image among its prominent market segment about new services in order to face the challenge." The bank also acts as a Participatory Credit Institution (PCI) for the Government's new project to provide houses for the lower and middle income earners.

"However, we are disappointed that our allocation in this scheme is insignificant and we are not in a position to issue as many loans as we expected through this loan scheme due to this reason," Rajakaruna said. As the premier housing bank in the country, we contribute a large sum of money to the Treasury and to the Consolidated Fund.

Yet our contributions have not been recognised in the process of allocation of money under the new loan scheme, he said. The bank has contributed 67.46 million in 1999, Rs. 60.54 million in 2000 and Rs. 52.90 million in 2001 to the Treasury by way of Deemed Dividend Tax while Payments to the Consolidated Fund were Rs. 50 million in 1999, Rs. 25 million in 2000 and Rs. 50 million in 2001.

New business

The bank also plans to strengthen its Middle East market share by getting more Sri Lankan workers to save with them.

"A mechanism is being worked out with workers and employers in some of the companies in the Middle East to increase our market share. We hope to launch this new service in about a month's time," Rajakaruna said.

Spreads wings

The bank also entered into the business of mobilising savings a couple of years ago. As at end 2002, the bank exceeded its mobilising targets by 20%. The figures were not available immediately as the final accounts were being finalised.

The bank plans to increase the number of savings counters this year in addition to the present counters in Kollupitiya, Galle, Kandy and Gampaha, he said.

Housing bank sans a house

Although the SMIB is known as the housing bank of the nation, it did not have its own premises for the head office. It has been paying millions of rupees by way of rent so far.

The chairman said this matter is being referred to by the management at present. "We are exploring opportunities to purchase our own building premises.

The SMIB had its own premises at Jawatte some time ago and it was sold due to various reasons.

Since then the bank is housed at Kollupitiya in a building owned by an individual. However, we are seriously considering the matter at present," he said.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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