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| Sunday, 2 February 2003 |
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President calls for efficient management practices in financial institutions Efficient management and sound lending practices in financial institutions are a must as has been highlighted again with the recent highly publicised failure of a bank, President Chandrika Bandaranaike Kumaratunga said recently. Addressing the gathering after opening the HNB Tower in Colombo, she said that social costs are high, human consequences distressing and the implications of public confidence in the system quite serious at times of failure. Expecting the government to bail out ailing banks can create a moral hazard as private banks can adopt imprudent lending practices, expecting the government to underwrite such behaviour. It is also unacceptable that companies go bankrupt after the auditors have issued reports that their (the companies') financial situation is healthy. "Therefore, it is time for the banking industry to critically examine its self-regulatory practices," urged President Kumaratunga. The banking industry at present is facing many challenges both globally and regionally. These include reducing costs, increasing revenues, minimising non-performing loans and customer satisfaction. Bankers and the industry should be willing to take challenges and succeed. She was confident that the cost of delivery of services will decrease in the future as government policy and economic growth are bridged by Information and Communication Technology (ICT) in our country. Expressing her views on high interest rates, the President said that policy makers and the industry need to face up to the fact that rates are high in our country compared to other countries which results in high borrowing costs. Productivity, whether driven by ICT or human resources, will lower costs while providing an efficient service to the customer. Kumaratunga said Hatton National Bank (HNB) has taken the bold step of investing in the future and can boast of being the most modern building in Sri Lanka. She was confident that the bank can face challenges and achieve results due to its long history and the steady growth it has experienced in the past. Central Bank Governor A.S. Jayawardena said that setting standards in good corporate governance, good conduct and looking after the depositors' money is a sacred duty entrusted to all banks by the Central Bank. Chairman HNB Chrisantha Cooray said the new building was a dream made possible due to the growth and success of the bank. He described it as a tribute to the endeavours of all Sri Lankans. |
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