IFC-SEDF assists in building risk management among local banks

COLOMBO: In the run-up to the proposed Basel II norms implementation in Sri Lanka in 2008, International Finance Corporation's South Asia Enterprise Development Facility is facilitating risk management training for the country's bankers.

Improving the capacity of local banks increases access to finance for small enterprises, which is key to private sector growth. At a two-day workshop on risk management, three major forms of financial risk that have minimum capital requirements under the Basel II agreement were covered: market risk, credit risk and operational risk.

The presenter was Dr David Lawrence, Exec Director of OpRisk Advisory USA. While talking about the three forms of risk, Dr. Lawrence said, "For each of these forms of risks, the Basel Accord sets out a number of risk management methodologies, ranging from the simplest to the most sophisticated."

The Central Bank of Sri Lanka has mandated that the simplest of these approaches be adopted beginning January 1, 2008. Dr. Lawrence elaborated on each of these approaches and the implementation issues associated with them. In his welcome speech Country Manager, IFC Sri Lanka and the Maldives and Programme Manager, SEDF, Gilles Galludec explained "our recently launched SEDF facility in Colombo is providing assistance to the financial sector in critical skill gap areas.

We endeavour to facilitate training and exposure for local bankers to international best practices. Risk management is one crucial area which IFC has identified in consultation with the Central Bank of Sri Lanka and local banks given Sri Lanka's move towards implementation of Basel II."

Director Bank Supervision, Central Bank of Sri Lanka P. Samarasiri discussed the road map for implementation of Basel II in Sri Lanka in his opening remarks. Participants included risk heads and other operational managers of ten local banks and officials from the Bank Supervision Dept of the Central Bank.

SEDF Sri Lanka Maldives is a multi-donor funded facility managed and operated by IFC, the private sector arm of the World Bank Group. SEDF was launched in Colombo on May 29, 2006 with the objective of promoting the growth of small and medium enterprises (SMEs).

A major component is assisted to the local financial sector to enhance internal technical capacities and improve access to finance for SMEs. SEDF provides direct technical assistance to identified partner banks as well as training and exposure programmes for the financial sector as a whole.