Legal action can be taken if banks do not reduce interest rates: Central Bank Governor

Sstar

Sstar

Vice President - Equity Analytics

Posts : 1426
Equity Stars : 9154
Reputation : 51
Join date : 2011-11-01

EXCLUSIVE:: The Central Bank of Sri Lanka (CBSL) has the authority to resort to legal action if commercial banks do not further reduce their interest rates in line with the stipulated rates, said the Central Bank Governor.

During an exclusive interview with AdaderanaBiz.lk, Cenrtal Bank Governor Ajith Nivard Cabraal said a recent survey conducted by the Central Bank has revealed that commercial banks could further reduce their interest rates.

Under these circumstance, the Central Bank had twice requested the commercial banks to reduce their interest rates and several banks had already responded and done so, said the Central Bank Governor.

Though the CBSL has the authority to take legal action against commercial banks which do not respond to such requests and reduce interest rates, he hopes such a situation does not arise, added Nivard Cabraal.

He also pointed out that interest rates could only be reduced to a certain extent so as to maintain a balance between the deposit and lending interests.

Economic analysts point out that Sri Lanka is prominent as a country with a high bank interest margin. While the difference between the interests rates of deposits and loans is considered the interest margin, while this is around 1.7 percent in Hong Kong, it remains as high as 4.3percent in Sri Lanka.

The Monetary Board recently decided to keep the CBSL interest rates which in turn decide the commercial banks’ interest rates unchanged in July as 6.50 to 8.00 percent and requested the commercial banks to further reduce their interest rates.

NC

NC

Assistant Vice President - Equity Analytics

Posts : 692
Equity Stars : 6378
Reputation : 55
Join date : 2014-07-10

බැංකුවල deposits තියලම වැඩක් නෑ එහෙනම් .... Crying or Very sad

eKelum

eKelum

Senior Equity Analytic

Posts : 51
Equity Stars : 4061
Reputation : 3
Join date : 2013-05-16

Sstar wrote:EXCLUSIVE:: The Central Bank of Sri Lanka (CBSL) has the authority to resort to legal action if commercial banks do not further reduce their interest rates in line with the stipulated rates, said the Central Bank Governor.

During an exclusive interview with AdaderanaBiz.lk, Cenrtal Bank Governor Ajith Nivard Cabraal said a recent survey conducted by the Central Bank has revealed that commercial banks could further reduce their interest rates.

Under these circumstance, the Central Bank had twice requested the commercial banks to reduce their interest rates and several banks had already responded and done so, said the Central Bank Governor.

Though the CBSL has the authority to take legal action against commercial banks which do not respond to such requests and reduce interest rates, he hopes such a situation does not arise, added Nivard Cabraal.

He also pointed out that interest rates could only be reduced to a certain extent so as to maintain a balance between the deposit and lending interests.

Economic analysts point out that Sri Lanka is prominent as a country with a high bank interest margin. While the difference between the interests rates of deposits and loans is considered the interest margin, while this is around 1.7 percent in Hong Kong, it remains as high as 4.3percent in Sri Lanka.

The Monetary Board recently decided to keep the CBSL interest rates which in turn decide the commercial banks’ interest rates unchanged in July as 6.50 to 8.00 percent and requested the commercial banks to further reduce their interest rates.

Its very good news for market...

stevenapple

stevenapple

Assistant Vice President - Equity Analytics

Posts : 632
Equity Stars : 5313
Reputation : 15
Join date : 2014-04-10

eKelum wrote:

Sstar wrote:EXCLUSIVE:: The Central Bank of Sri Lanka (CBSL) has the authority to resort to legal action if commercial banks do not further reduce their interest rates in line with the stipulated rates, said the Central Bank Governor.

During an exclusive interview with AdaderanaBiz.lk, Cenrtal Bank Governor Ajith Nivard Cabraal said a recent survey conducted by the Central Bank has revealed that commercial banks could further reduce their interest rates.

Under these circumstance, the Central Bank had twice requested the commercial banks to reduce their interest rates and several banks had already responded and done so, said the Central Bank Governor.

Though the CBSL has the authority to take legal action against commercial banks which do not respond to such requests and reduce interest rates, he hopes such a situation does not arise, added Nivard Cabraal.

He also pointed out that interest rates could only be reduced to a certain extent so as to maintain a balance between the deposit and lending interests.

Economic analysts point out that Sri Lanka is prominent as a country with a high bank interest margin. While the difference between the interests rates of deposits and loans is considered the interest margin, while this is around 1.7 percent in Hong Kong, it remains as high as 4.3percent in Sri Lanka.

The Monetary Board recently decided to keep the CBSL interest rates which in turn decide the commercial banks’ interest rates unchanged in July as 6.50 to 8.00 percent and requested the commercial banks to further reduce their interest rates.

Its very good news for market...

Except Banking and Finance sector. Cool

bandulawee

bandulawee

Manager - Equity Analytics

Posts : 286
Equity Stars : 5788
Reputation : 13
Join date : 2012-02-29

Looks like Central Bank is issuing threatening orders whe the low interest regime practiced by it is not giving expected results. Will they also threaten the big companies with legal action if they fail to borrow even at low interest.

yellow knife · 6 legal action Fri Jul 18, 2014 12:22 pm

yellow knife

Senior Manager - Equity Analytics

Posts : 436
Equity Stars : 6057
Reputation : 21
Join date : 2011-10-07

bandulawee wrote:Looks like Central Bank is issuing threatening orders whe the low interest regime practiced by it is not giving expected results. Will they also threaten the big companies with legal action if they fail to borrow even at low interest.

NC

NC

Assistant Vice President - Equity Analytics

Posts : 692
Equity Stars : 6378
Reputation : 55
Join date : 2014-07-10

bandulawee wrote:Looks like Central Bank is issuing threatening orders whe the low interest regime practiced by it is not giving expected results. Will they also threaten the big companies with legal action if they fail to borrow even at low interest.

Nicely said.. Very Happy

D.G.Dayaratne

D.G.Dayaratne

Senior Vice President - Equity Analytics

Posts : 2019
Equity Stars : 8691
Reputation : 57
Join date : 2011-12-13
Location : Kotte

Any top man under present system can exits if he facilitate top people to make money and manage the institution and area
under purview with out severe crisis

No severe crisis in the economy so far

CB Governor can say and do any thing under present circumstances

besthope

besthope

Manager - Equity Analytics

Posts : 100
Equity Stars : 5572
Reputation : 0
Join date : 2012-02-20

D.G.Dayaratne wrote:Any top man under present system can exits if he facilitate top people to make money and manage the institution and area
under purview with out severe crisis

No severe crisis in the economy so far

CB Governor can say and do any thing under present circumstances

Halo Halo Mr Deegoda Gamage , how is the Price Mechanism treating you ah ?
I am like in Angoda men. missing bus becos you always negative then no.
so i not buying any shares and also our SHARK saying JKH comming to 200 no.
so now Angoda level MAD Divergence. so pls telling any good share to buy ah ?
Nowadays, i am not believing anymore that Sastara-karaya, Acchi Fibbing, Mad Diverging, Candlestick selling Mr. Katta Karola (aka SHARK).

P.S. Pls be attending getting together. and tell your drinking requirement to His Worthiness who is organising all anti Matata Tittha matters through Englishmen Krishantha from dooty free in Do-Buy.

P.S.S. - Aney you gave a mara rope regarding Sanasa Bank Rs 15/- dividend last year. adey still waiting and asking postman for cheque everyday men.

stevenapple

stevenapple

Assistant Vice President - Equity Analytics

Posts : 632
Equity Stars : 5313
Reputation : 15
Join date : 2014-04-10

yellow knife wrote:

bandulawee wrote:Looks like Central Bank is issuing threatening orders whe the low interest regime practiced by it is not giving expected results. Will they also threaten the big companies with legal action if they fail to borrow even at low interest.

D.G.Dayaratne

D.G.Dayaratne

Senior Vice President - Equity Analytics

Posts : 2019
Equity Stars : 8691
Reputation : 57
Join date : 2011-12-13
Location : Kotte

Dear Besthope Thanks
CBG' s Warning to C Banks also clearly indicate how they disregard price mechanism

But we have to accept that no major economic crisis so far

I am sorry about re rope about Sanasa.I also incurred losses

SHARK aka TAH

SHARK aka TAH

Expert

Posts : 4360
Equity Stars : 8929
Reputation : 204
Join date : 2013-08-01

D.G.Dayaratne wrote:Dear Besthope Thanks
CBG' s Warning to C Banks also clearly indicate how they disregard price mechanism

But we have to accept that no major economic crisis so far

I am sorry about re rope about Sanasa.I also incurred losses

How come you incurred loss Shocked

you got dividends rights 6rs.

bandulawee

bandulawee

Manager - Equity Analytics

Posts : 286
Equity Stars : 5788
Reputation : 13
Join date : 2012-02-29

When UNP came to power in 2001, the country had a negative GDP ratio. Treasury Bill rate was around 18% and deposit rates in financial institutions were around 20% to 25%. The bank lending rates hovered around 20% to 30%. The UNP government with foreign advice brought down the Treasury Bill rates to around 12% and the banks followed suit but keeping the same margins. There was no reduction in Bank deposits as the investment opportunities in Sri Lanka are limited. During this time the ASI increased by about 30% over the years. Reduction in interest rates did not result in credit growth but Bank borrowers got the benefit by transferring their high interest loans to low interest. The borrowers were mainly importers and traders who collected higher profits with the interest reduction which was not passed on to consumers. As the consumers did not receive any benefit during this period, the UNP government lost in the next election.
After the CBK regime the present government took a leaf from the UNP books and Central Bank started reducing the Treasury Bill rates further expecting it to be reflected in the market. However as the interest rates were either in par or lower than unpublished inflation the banks did not follow suit. The authorities thereafter imposed ceilings on deposit rates for Banks and Financial institutions. The depositors having no other option of investments after burning their fingers at the stock market remained with the banks even at low rates. Still there was no credit growth and the banks managed to increase their profits through higher margin. Now the Central Bank has to step in and warn the banks of legal action to get the banks to reduce lending rates and reduce their margins. With lower lending rates Central Bank expects a credit growth. However from around 1998 there has been not much growth in credit with low investors confidence. In earlier years this could have been attributed to the war. But in todays context , there has to be something fundamentally wrong more than interest rates which has to be addressed to boost investor confidence. Low lending rates will help the government borrowings but if it is expected to pass part of the benefit to consumers, the traders and importers should be forced to reduce their margins unlike during the UNP regime. As consumers we have to hope the reduced margins will not be collected by the government by further increasing the indirect taxes.

worthiness

worthiness

Senior Vice President - Equity Analytics

Posts : 2577
Equity Stars : 8932
Reputation : 115
Join date : 2011-04-08

Simply speaking, considerable difference between deposit & lending rates are unfair for any developing country. If such rates are considerably higher than the regional practices, it is the deviation to be thought twice. Commercial sectors always prefer to thrive their bottom line targeting the enterprise preferences regardless of overall economic role. Regulated rates encourage new initiative of small & medium enterprises which is much needed into our economy. Focussing the new opportunities in rural sector what had been completely neglected are to be initiated by providing lower rates which are affordable to agricultural, basic industries & the service sectors.

eKelum

eKelum

Senior Equity Analytic

Posts : 51
Equity Stars : 4061
Reputation : 3
Join date : 2013-05-16

බැංකු පොලිය අඩු නොකළොත් නීතිමය පියවර ගත හැකියි -මහ බැංකු අධිපති -Video

http://www.adaderana.lk/biz/%E0%B6%B6%E0%B7%90%E0%B6%82%E0%B6%9A%E0%B7%94-%E0%B6%B4%E0%B7%9C%E0%B6%BD%E0%B7%92%E0%B6%BA-%E0%B6%85%E0%B6%A9%E0%B7%94-%E0%B6%B1%E0%B7%9C%E0%B6%9A%E0%B7%85%E0%B7%9C%E0%B6%AD%E0%B7%8A-%E0%B6%B1/

Rocky

Rocky

Senior Manager - Equity Analytics

Posts : 572
Equity Stars : 5680
Reputation : 73
Join date : 2011-02-01

COMBANK is the Nbr one culprit in this regard. Hope the new Chairman after Roy fixes this lapse. They conveniently forget to reduce the interest rates on loans. This happened from 2013 and still continues. They have lame excuses for not doing so.

Why doesn't the CBSL Gov. Just go in and audit their rates. Al the rates cannot be changed in their systems. If this happens there would not be complaints.

COMBANK watch out.

gamaya

gamaya

Assistant Vice President - Equity Analytics

Posts : 824
Equity Stars : 6757
Reputation : 39
Join date : 2011-01-22

Banks are making fat profits using depositers money.

On the other hand, banks lending rates gives some indication of the real inflation of the country, which CB is claiming below 2 digits..

Sponsored content

Name*:
Phone number:
Email address*:
Comments*:
* - required fields	Learn

Name*:
Phone number:
Email address*:
Comments*:
* - required fields	Learn

Latest topics

Legal action can be taken if banks do not reduce interest rates: Central Bank Governor

1 Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Thu Jul 17, 2014 11:57 pm

Sstar

2 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 7:51 am

NC

3 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 8:47 am

eKelum

4 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 9:51 am

stevenapple

5 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 12:03 pm

bandulawee

6 legal action Fri Jul 18, 2014 12:22 pm

yellow knife

7 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 1:05 pm

NC

8 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 1:39 pm

D.G.Dayaratne

9 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 3:03 pm

besthope

10 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 3:16 pm

stevenapple

11 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 3:59 pm

D.G.Dayaratne

12 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 4:04 pm

SHARK aka TAH

13 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 5:48 pm

bandulawee

14 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Fri Jul 18, 2014 9:43 pm

worthiness

15 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Sat Jul 19, 2014 8:12 am

eKelum

16 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Sat Jul 19, 2014 2:24 pm

Rocky

17 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor Sat Jul 19, 2014 6:46 pm

gamaya

18 Re: Legal action can be taken if banks do not reduce interest rates: Central Bank Governor

Sponsored content

New topics