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Thanks to the advent of technology, everyday banking has never been easier. We just insert an ATM card in the teller machine and cash is dispensed. We never really bother to think about the vast operation that lies behind the simple act of getting cash from the bank.

Banking is one of the most important and biggest sectors of our economy. With a host of local and foreign commercial banks in the fray, individuals and corporate customers can select a range of financial services that suit their needs.

Nevertheless, banks must move with the times. Laws governing banking have to be changed from time to time to reflect modern trends and customer aspirations. Current developments in banking such as the collapse of certain banks and financial institutions should also be taken into account. It is in this context that we should view the government's decision to amend the Banking Act of 1988.

The amendments will fortify the role of the Banking Supervision Department of the Central Bank of Sri Lanka, enforce the legitimate directions given to banks and introduce guidelines for eligibility criteria for appointment to the Board of Directors of commercial and specialised banks. New banking and foreign exchange management laws are anticipated later this year.

These amendments are essential, given recent events in the banking sector. The Pramuka Bank is a case in point. Greater supervision by the regulatory authority could lead to the prevention of such incidents in future. Supervisory capabilities should also be strengthened to save unsuspecting depositors from bogus finance houses.

As Finance Minister K.N.Choksy has pointed out at a recent seminar, the failure of banks not only adversely affects the money market as a whole, but also causes much financial loss and hardship to constituents and depositors. Protecting their rights should be uppermost in any plan to heighten banking surveillance.

Many negative comments have been made about the two state-owned commercial banks, but their contribution to the economy cannot be under-estimated. With a branch network unmatched by the private banks, they have taken banking even to the most remote parts of the country. However, it is hard to ignore calls for their modernisation and restructuring. Their employees must realise that work ethics and customer expectations have changed in tune with the times we live in.

People accustomed to the swift service and customer-focused outlook of private banks have every right to expect the same level of service from State banks. The State-owned banks have been called into fund huge projects implemented by government agencies and private companies. Although the Bank of Ceylon and the People's Bank are primarily commercial banks, they have been filling the lacuna created by the paucity of specialised development banks. One reason for this state of affairs is that development banking is not lucrative in the short term.

Minister Choksy has said that the Government's encouragement for industrial expansion and diversification by the private sector cannot bear fruit unless development banking is strengthened.

The government should seriously consider the establishment of more development banks to add impetus to the enthusiasm of our industrialists and businessmen.

Banking, like every other business, has turned into a global phenomenon. Several renowned international banks are operating successfully in Sri Lanka. Some others have partly or fully pulled out of Sri Lanka citing various reasons, paving the way for local banks to take over their operations. Such mergers and acquisitions are nothing new, but the need for amendments to the banking laws to finalise such deals in a proper manner has been highlighted.

There is no reason why our banks cannot venture overseas successfully in line with global trends. The Commercial Bank has shown the way with a Memorandum of Understanding to acquire Credit Agricole Indosuez's Bangladeshi operations. Other local banks too must explore the possibility of setting up units overseas.

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