'Educate public on investment options':

Bright outlook for Sri Lanka's capital market

Sanjeevi JAYASURIYA

Sri Lanka's capital market outlook has bright prospects with the reduction of interest rates.

It is important to educate the public regarding investment options to maximize their returns, Financial Services Academy Director, the training arm of the Security Exchange Commission Sri Lanka, Dr. D.B.P.H. Dissa Bandara told Daily News Business.

The reduction in interest rates has compelled the banks to offer low interest rates for savings accounts and this has resulted in a drop in customer's savings income. They are moving away from the banking sector, he said.

The low interest rate is a good sign for the country's capital market development and awareness should be created among the public on capital market dealings. They should invest their money in avenues that yield more benefits for them, he said.

When the capital market transactions increase, it helps Sri Lanka's economy to secure low cost capital. This would reduce cost of production and thereby goods could be offered at more competitive prices to consumers, he said.

The reduction in interest rates would also make the borrowings from the banking sector more attractive and this would lead to economic development. When interest rates are low, savers will shift from the banking sector to other channels such as the share market where the return is higher, he said.

The share market growth in the past 12 months is more than 50 percent.

This is an opportune time for the capital market to woo investors from the domestic sector to enhance capital market activities, Dr. Dissa Bandara said.