Increase in interest rates have obilised bank funds - HNB CEO

by Hiran H. Senewiratne

The Government's decision to increase interest rates has resulted in increasing the cost of mobilising funds in banks, said CEO of Hatton National Bank Limited (HNB) Rajendra Theagarajah.

He said that when the interest rate goes up, savings and deposits will increase and the cost of mobilising of funds in banks will also go up, which is an additional cost for them. In the macro economic perspective rising interest rates will have implications for banks.

In lending side there would also be a problem for banks to pass on benefits to customers increasing of bank mobilising cost.

Therefore most of the banks in the country will go for diversification in their businesses to other sectors to be in the business, Theagarajah said. HNB would focus on productivity enhancement in the organisation in many ways.

HNB is now in the process of increasing their standards firstly in the entire Colombo region afterwards Islandwide. Under this programme all services will be delivered to customers in a uniform manner, he said.

He said the increase in the capital base of Rs 2.5 billion will help banks to consolidate its position with a 5 per cent capital ration. Theagarajah stressed the importance of having legislation to curb computer crime in line with international practices to deter those involved in computer crimes.

He said that banks are compelled to store data in hardcopies that Sri Lanka's judiciary still does not consider computer-based evidence.

Once the legislation is passed we could save productive space of the Bank some other work, he said.