Reducing lending rates timely decision

‘Customers’ confidence level in finance companies improving’:

Charumini de Silva

The concept of reducing lending rates is a timely decision taken by the Central Bank. There is a slight improvement in the confidence level of customers about registered financial companies in the country as financial rules and regulations have been made stronger, the Finance Houses Association of Sri Lanka Chairman Shirley Perera told Daily News Business.

He said due to the activities of various unregistered finance companies, people lost confidence in financial companies and as a result during the first six months of this year Rs.70 billion was withdrawn by customers and were banked. “With this concept we would regain our money,” he said.

Most senior citizens depend on banks with lesser interest rates and at present with the positive situation of the financial companies many pensioners deposit their money in them since they provide their customer a higher interest rate.

Though commercial banks have excess liquidity they are not lending it to the public. Banks invest the excess money in treasury bills and treasury bonds. The benefits are not shared among customers. The excess money should be given to the SME sector as many development projects are being launched islandwide, he said.

Using money only for consumption would not help a country’s economy to develop. There should be economic activities with proper investments to improve the economy. However, the decision to reduce lending rates would help financial companies to lend funds at low cost, provide leasing facilities and provide higher purchasing at a low cost. This would help the country to have more economic activities and improve the country’s economy, he said.