A foreign bank which set-up shop in Jaffna recently mobilized Rs. one billion in deposits but was unable to initiate a single loan, compelling it to transfer those monies to Colombo instead, a Central Bank of Sri Lanka (CBSL) officer alleged.
CBSL Deputy Governor K.G.D.D. Dheerasinghe speaking at the opening of CBSL’s provincial office in Jaffna on Sunday alleged that the CEO of that bank had said that he was guilty that he was unable to indulge in any lending in the North.
Priority for development is credit, said Dheerasinghe. CBSL will conduct a socioeconomic survey in the area which was due to have had been kicked off on Thursday to ascertain the needs of the people in Jaffna,
The last islandwide census was taken in 1981. CBSL will assist in the implementation of credit schemes in the fields of agriculture, fishery, animal husbandry and other small and medium enterprise activity.
Moneys will be chanelled through the banking system.
Jaffna Government Agent K. Ganesh said that there are some 200,000 families in Jaffna, of whom 95,000 live off government handouts.
“There are 138 bank branches and eight other financial institutions in Jaffna,” Dheerasinghe continuing said. “We need to move out from the township and move into the interior and villages to provide credit,” he said.
Referring to the North and East, he said, “We know the people underwent hardships for nearly three decades, so it’s the duty of us to move on the growth strategy and not simply collect deposits or lending.”
Dheerasinghe further said that the North and East have been contributing only 8% of Gross Domestic Product (gdp) to the country. “This should at least be 20%,” he said. “We took a long time to do it in Colombo, but it will be done sooner in Jaffna because they are more diligent,” he said.
Dheerasinghe further said that they will be opening a provincial office in the East soon. CBSL already has provincial offices in Matale, Anuradhapura and Matara. Those were established in the 1980s.
L. Sritharan, the Manager of CBSL’s Provincial Office in Jaffna said that the possible lending areas in the North were agriculture, housing and the small and medium enterprise sector. He said that the problem of lending to those sectors were the unavailability of balance sheets and profit and loss accounts. Jaffna Mayor and EPDP-er P. Yogeswari told The Sunday Leader that the biggest problem in Jaffna was youth unemployment, where 90% of the youth are advanced level qualified.
Meanwhile Nick Nicolau, CEO HSBC, whose bank recently opened a branch in Jaffna said that they are taking steps to start lending in the peninsula.
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