More foreign banks line up to enter Sri Lanka

Monday, 16 November 2015 00:05 - - {{hitsCtrl.values.hits}}

By Charumini de Silva

Sri Lanka’s Central Bank confirmed that five foreign banks will enter the country’s financial industry in the near future.

“We have received five applications seeking approval to commence foreign banking operations in Sri Lanka and as the Central Bank we are keen to allow large, well-established financial institutes to make an entrance into the country’s fiscal system,” Central Bank Governor Arjuna Mahendran told the Daily FT.

With the Bank of Tokyo Mitsubishi UFG Ltd. (BTMU) formally announcing that it will be opening a new representative office in Sri Lanka at the end of March 2016, it would be strategically important to Sri Lanka to attract and facilitate investment by Japanese companies, a senior official said.

“In a time where Sri Lanka is opening up its thresholds to financial markets, it would be useful to have a well-established Japanese bank to obtain a free flow of funds,” the official said.

The official added that the Bank of Tokyo Mitsubishi would operate in Sri Lanka the same way as a normal bank.

The Governor further noted that having a bank representing the country would be useful for Japanese corporate entities that had been investing in Sri Lanka while also attracting new investors and companies from Japan.

Noting that the entrance was timely, he pointed out that this would greatly benefit Sri Lanka as Japan had once again come forward as a major aid provider/lender to the Government’s infrastructure projects especially in the areas of power and highways.

Commenting on the timeframe in which the agreement was signed, Mahendran said: “It was signed a few months ago after I assumed duties as the Governor.”

Saying that the regulator was trying to improve the country’s banking system and boost capital flows to local businesses, he said: “We are looking for banks from other countries. We would like the banking institutions in those countries to at least tie up with our banks even if they do not set up a branch here.”