Commercial Bank PLC

Product of the bank,

1.      Savings Accounts

A.    Main Accounts

                                I.            Regular Savings Accounts

If you are a resident of Sri Lanka, over the age of 18 years, you can open this as an individual account or a joint account. The interest rate of this account is 3.50% P.A.

                             II.            Super Saver Accounts

You can open an account with a minimum deposit of Rs 50,000/-. Higher interest rates as your deposit value increases. A Loan facility up to 90% of deposit balance at a special concessionary interest rate. Commercial Bank Online Banking facility with a 50% concession on the startup and annual fee.

                          III.            Power Bonus Accounts

Flexibility of a Savings Account and the high interest available on a Fixed Deposit. A specialized Savings Account that pays a quarterly bonus of 60% on the interest earned. Power bonus is a great opportunity for first time wage earners as well as the self-employed. Also for small and medium scale savers can earn a high return. The minimum balance you need to maintain this account is Rs 5000/-.

Monthly interest paid- (60% more) – 3.5% P.A.

                          IV.            Personal Foreign Currency Accounts

You can apply for Sri Lanka rupee or foreign currency loans & advances at concessional rates. This facility enables you to retain the foreign currency deposits intact. Arrangements can be made for a member of your family or friend to operate this account on your behalf.

                            V.            Udara Senior Citizens Accounts

A special interest rate higher than the normal interest rate is offered (11.5% P.A.). additional interest rate up to 1% over the interest rate paid for regular savings account. 

B.     Minors and Youth accounts

                          VI.            Arunalu Children’s Savings Accounts

Cash prizes of Rs 10,000/-, Rs 7,500/- and Rs 5,000/- respectively for account holders who have gained the 1^st, 2^nd and the 3^rd   highest marks in school term tests. Interest rate per annum is 6.5%.

                       VII.            Dotcom Teen Accounts

Withdrawals up to Rs 20,000/- per day can be made through branch counters or ATMs.

                    VIII.            Anagi Women’s Savings Accounts

Minimum deposit of 1000/-

2.      Fixed Deposits 

I.                    Millionaire Accounts

Selectable investment period spanning from 2 to 6 years. Ability to receive any amount starting from Rs. 500,000/- (In multiples of Rs. 500,000/-). Instant loan up to a maximum of 75% of the account balance.

II.                 Money Market Accounts

Seven days’ prior notice is required for withdrawal of funds & a minimum account balance of Rs. 100,000/- should be maintained to earn the special interest rate (8.25% P.A.).

III.              Treasury Bonds

Maturity period ranges from 2 to 20 years.

IV.              Fixed Deposits

Get up to 90% of the deposit as a cash advance.

C.    Current Accounts

I.                    Achiever Current Accounts

Credit cards with the joining fee and the 1^st year annual fee. Account can be opened with a minimum deposit of Rs.10000/-. You will receive monthly statements of account. You also have the option of receiving e statements to an email address of your choice.

D.    Loans

I.                    Home Loans

Loan approval can be got in 3 days without any additional charges. Can have longer repayment period. And gives attractive and competitive low interest rates. To get this loan you should have a minimum monthly income of Rs.25000/-. This loans are available for,

·         Purchasing a house, apartment or land

·         Building a house

·         Completing a partially built house

·         Renovate, extend or complete a house

·         Paying off an existing home related loan

II.                 Foreign Currency Home Loans

The approval of the loan can be got in 3 days without any additional charges. And have longer repayment period. To get this loan you should be a Sri Lankan employed abroad who is in a position to service such loans in foreign currency and you could borrow from USD 25,000/- to USD 100,000/- or equivalent in other currencies mentioned above.

III.              Personal Loans

The maximum loan amount you can obtain is flexible, depending on your disposable income, repayment capacity and requirements. Your loan will be processed within a maximum of three working days, after submitting the loan application with all required documents.

You can obtain the lone for following purposes,

·         Purchase of vehicles

·         Payment of credit card balances

·         Higher education for you or an immediate family member – locally or abroad

·         Fund weddings or other social functions

·         Surgical and medical expenses

IV.              Green Loans

To obtain this loan you should be a permanent employee with a minimum monthly salary of Rs.50000/- and you should have a minimum service of 01 year in the current employment. Maximum repayment period for loan is 7 years. The loan is minimum of Rs.50000 and maximum of 3mn*

V.                Pensioners’ Loan

This loan available for government pensioners. The minimum net pension should be Rs.15000/- per month. The minimum loan amount is Rs.100000/- and the maximum is Rs.2500000/-. The loan can obtain for followings,

• Renovations of your house
• Travelling abroad
• Surgical and medical expenses of family members
• Wedding expenses of children
• Educational expenses of children
• Settle existing loan/credit cards from other Banks

E.     Leasing

I.                    Green Leases

Leases to fund purchasing of hybrid vehicles, electric vehicles, solar panels & Other energy efficient machinery / equipment. To get this loan employee should be a permanent employee with a minimum monthly salary of Rs.50000/- and should have a minimum service of 01 year in the current employment.

II.                 Super Leasing

With ‘Super Leasing” you can pay part of the vehicle’s value at the end of the lease period-so your monthly rental is calculated for only a part of the value of the vehicle. Therefore, the monthly rental you have to pay is lower than of a regular leasing facility. This will enable you to buy a higher value vehicle at a lower monthly rental.

BANKING SECTOR IN SRI LANKA

The Banking sector in Sri Lanka, which comprises Licensed Commercial Bank (LCBs) and Licensed Specialized Banks (LSBs), dominates the financial system and accounts for the highest share of the total assets in the financial system. Banks play a critical role within the Sri Lankan financial System, as they are engage with in provision of liquidity to the entire economy, while transforming the risk characteristics of assets.

• ·         Licensed commercial Banks
• ·         Licensed Specialized Banks

Licensed Commercial Bank

Licensed Commercial Bank is permitted to accept demand deposits from the public and maintain current accounts and engage in a full range of foreign currency activities. There are 26 commercial bank in Sri Lanka. Those bank can categorize as follows.

State banks-02

Domestic Private banks-11

Foreign banks-13

·         Amana Bank ·         Axis Bank Ltd ·         Bank of Ceylon ·         Bank of China Limited ·         Cargills Bank Ltd ·         Citibank N.A.

·         Commercial Bank of Ceylon PLC ·         Deutsche Bank AG ·         DFCC Bank PLC ·         Habib Bank Ltd ·         Hatton National Bank PLC ·         ICICI Bank Ltd

·         Indian Bank ·         Indian Overseas Bank ·         MCB Bank Ltd ·         National Development Bank PLC ·         Nations Trust Bank PLC ·         Pan Asia Banking Corporation PLC

·         People's Bank ·         Public Bank Berhad ·         Sampath Bank PLC ·         Seylan Bank PLC ·         Standard Chartered Bank ·         State Bank of India

·         The Hong Kong and Shanghai Banking Corporation Ltd (HSBC) ·         Union Bank of Colombo PLC

Licensed Specialized Banks

The licensed specialized banks are the financial institutions which have obtained a licensed from the central bank to conduct specialized banking business under the banking Act. There are 07 specialized banks in Sri Lanka.

State banks -06

Private banks-01

LSBs

Housing Development Finance  Corporation Bank of Sri Lanka  (HDFC)

Lankaputhra Development Bank Ltd.

National Savings Bank  "Savings House"

Pradeshiya Sanwardhana Bank

Sanasa Development Bank PLC

Sri Lanka Savings Bank Ltd

State Mortgage & Investment Bank

What are the assets and Liabilities of a bank? 

·         The assets of a bank are the outstanding loans of their customers. Additionally, the bank would probably have investments of its own that would be assets to the bank, as well as the normal assets of property, fixtures and equipment.

·         The liabilities of a bank are the customer checking, saving or investment account deposits. Additionally, normal liabilities such as the bank’s own loans payable or other similar obligations would be liabilities, just as they are in any other business.

Risk in the banking sector

There are many types of risks that banks face. credit risk, market risk, and operational risk are the three major risks. The other important risks are liquidity risk, business risk, and reputation risk.

Credit risk:  risk of losses that result from the inability of the bank's clients or other stakeholders to meet their financial commitments

Market risk: This risk, generated by trading activities (interest rates, foreign exchange, loss of value of financial instruments.)

Operational risk:  risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

 CENTRAL BANK OF SRI LANKA

Central Bank of Sri Lanka is the monitory authority of Sri Lanka and the apex institution in the country's financial sector. it was established in 1950 under the monitory Law Act No.58 of 1949. it is a government-owned semi-autonomous body, and amendments to the Monitory Law Act in December 2002,is governed by five-member Monitory Board, comprising the governor as chairman, the secretary to the Ministry of Finance and planning, and three members appointed by the president of Sri Lanka, on the recommendation of the minister of finance, with the concurrence of the constitutional Council. 

Vision 

           " A credible and dynamic bank contributing to the prosperity of Sri Lanka." 

Mission 

"Maintaining economic and price stability and financial system to support sustainable growth through policy stimulus, advice, commitment and excellence." 

Objective of the Central Bank

 There are two main objective of the Central Bank. then,

           • Maintaining economic and price stability

           • Maintaining financial system stability

The two objectives are correlated and complement each other. Ensuring financial system stability is of prime importance as monetary policy is transmitted through financial intermediaries (institutions) to achieve price stability. Price stability is important for financial system stability as interest rates, exchange rates and other asset prices move in response to changes in the general price level, impacting on the risk profile of financial institutions. Economic, price and financial system stability are necessary for sustained economic growth.

Price stability –

 Price stability is interpreted to mean low and stable inflation. Low inflation or price stability fosters sustainable long-term economic growth and employment. The CBSL uses monetary policy measures to control inflation

Financial system stability-

Financial system stability can be defined as the ability of the financial system to perform its main functions of resource mobilization and allocation, risk management and the settlement of payments, effectively at all times, even under stressful circumstances. Therefore a stable financial system is typically characterized by the effective functioning of financial institutions, markets and infrastructure.

Function of Central Bank of Sri Lanka

Core Functions

(a)   Conduct of monetary policy.

The CBSL conducts monetary policy to maintain price stability in the domestic economy. Monetary policy operates primarily by influencing the cost and/or availability of money. This is done through the interest rate and the credit availability mechanism.

(b)   Conduct of exchange rate policy.

A flexible exchange rate system was adopted in June 2001. The exchange rate is determined by market forces of demand and supply, reflecting the macroeconomic fundamentals in the economy. The CBSL may intervene in the foreign exchange market to prevent excessive volatility in exchange rates and to maintain a comfortable level of external reserves

(c)   Management of the official international reserves.

The CBSL manages the official international reserves of the country. The MLA stipulates that the CBSL should maintain adequate foreign exchange reserves in liquid foreign currencies and a small reserve in gold to maintain the international stability of the Rupee and freedom in current international transactions.

(d)   Oversight of the financial system.

As part of its mandate of financial system stability, the CBSL undertakes surveillance and oversight of the entire financial system taking into account its interaction with the real economy to monitor and limit systemic risks which could lead to financial and economic crises

(e)   Licensing, regulation and supervision of banks and selecting non – bank financial institutions.

The CBSL is responsible for regulating and supervising banks and selected non-bank financial institutions to promote their soundness and to safeguard the interests of depositors and investors. The regulation and supervision of individual financial institutions is referred to as micro prudential policy

(f)    Provision of settlement facilities and the regulation of the payment system.

The maintenance of a well-functioning and secure payment and settlement system is an essential ingredient for a stable financial system. In terms of the Payment and Settlement Act, the CBSL is authorized to regulate and supervise payment, clearing and settlement systems.

(g)   Issue and distribution of the national currency.

The CBSL has the exclusive right to issue currency notes and coins that are the legal tender in Sri Lanka. There is no maximum limit imposed on the issue of currency. The issue of currency is primarily based on the transaction demand for money.

(h)   Compilation and dissemination of economic data and statistics

.

The CBSL compiles statistics required to formulate macro-economic policies and disseminates information on the economy to the public. This includes statistics on money, banking and the financial sector, balance of payments, national income, prices, wages and employment, agriculture, industry, trade and services, government finance and public debt. The CBSL also conducts economic, financial and business surveys.

(i)     Acting as the banker and financial adviser to the Government.

As banker to the Government, the CBSL maintains the accounts of and provides banking facilities to Government departments, agencies, institutions and certain statutory boards. The CBSL may give guarantees in favor of the Government. The CBSL also provides provisional advances to the Government.

Agency Functions

      In addition, the CBSL also performs the following agency functions on behalf of the Government of Sri Lanka:

(a) Management of the public debt.

(b) Foreign exchange management.

(c) Fund management and acting as the custodian of the Employees’ Provident Fund.

(d) Facilitating financial inclusion.

(e) Financial intelligence services to detect and prevent money laundering and terrorist   financing.