Strong banking sector has helped mitigate financial crisis - HNB CEO

Shirajiv Sirimane

Asia which includes Sri Lanka has been more resilient to the global financial crisis, Managing Director / Chief Executive Officer of Hatton National Bank, Rajendra Theagarajah said.

Speaking at the 25th LBR LBO CEO Forum at Cinnamon Grand last week he said one of the main reasons for this is the strong banking sector in this region.

“After the 1997 financial crisis the Asian banks have adopted several meaningful measures which are now paying dividends he said.

CEO HNB Rajendra Theagarajah

He predicted that the Western countries, UK and USA which are hit by the present financial crisis would end up the year with less that 1 per cent GDP.

“In contrast the Asian countries would have their GDP’s averaging around the 4 percent mark,” he said.

Theagarajah said the large populations in China, India and Indonesia have stood as buffer against the global financial crisis. “The large populations have created a market within the country for local manufacturers,” he said.

The large populations have being a burden on governments as they have to provide various handouts. “However banks are now turning this large population and the poverty aspects to a positive factor.”

He said instead of subsidies banks looked at the micro finance aspect and it has turned out to be a major success. “Banks that got involved in Micro finance were able to withstand the global financial crisis,” he said. Several banks in countries like, Cambodia, Indonesia and Bangladesh have been concentrating on micro finance and their profit margins have passed the US$ 500 million.

In Sri Lanka, Sanasa Bank has been in the forefront of micro finance for several decades and today even top global IT firms are patronising it. He also stamped the fact that micro finance is not CSR but a profit making banking tool and banks in Bangladesh spell out the most successful story in the region,” he said.

The HNB too is now into the micro finance in a big way and the move is paying rich dividends.

“We are currently on the look out for a Telco operator to innovate a product where credit lending and settlement can be done online specially in areas where branches are not available in close proximity to the customer,” he said.