Micro financing shows high growth potential

Sanjeevi JAYASURIYA

The micro financing sector has shown a high growth potential in the backdrop of rapid economic development taking place in the country.

The banking industry needs to focus more on micro financing where the industry has more opportunities to actively involve in the progress of the country through financial inclusion.

A regular and legal policy framework with a strong supervisory mechanism should be in place to support growth and substantially achieve greater financial inclusion, Hatton National Bank Managing Director and CEO Rajendra Theagarajah told Daily News Business.

The four key products and services the micro finance sector should target would be credit, savings, insurance and money transfer.

Financial education should be incorporated in each and every product and micro entrepreneur skills development programmes are necessary to make the recipients of these financial services more responsible and accountable, he said.

The country's banking industry has maintained positive growth and sustaining the momentum would not be easy at present level as there are many challenges and risks.

Among them are balancing the innovation needed with the required regulatory framework, rebalancing of investment strategies and the need to maintain a balance between growth and stability.

"We need to adjust to new realities in the global economic, financial and political environment.

The global economic landscape has been greatly altered by the financial turmoil and uncertainties of the past years.

The fundamental shift in the economic drive from the West to Asia have made Asia and emerging markets assume greater responsibility in the global economy," he said. Asia's contribution for sustainable banking industry has become more prominent while market strategies, business models and investment policies need to be adopted as the global economy recovers.

The country's banking industry is well capitalized with current bank capital levels and harnessing technology in financial inclusion efforts will bring in far reaching benefits, Theagarajah said.