ID :
25626
Mon, 10/20/2008 - 19:56
Auther :
Shortlink :
http://m.oananews.org//node/25626
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Stringent measures had saved Sri Lanka from crisis: Cabral
Colombo, Oct 20 (PTI) Foreseeing the vulnerability of the
housing sector advances, the Central Bank of Sri Lanka had had
started taking stringent measures on housing loans, even as
the sub-prime mortgage crisis gripped the United States in the
beginning of this year.
"We increased the risk weight applicable for housing
loans from 50 percent to 55 percent in November 2006," the
central bank Governor Ajith Cabraal said adding Sri Lanka
would not be under any major negative impact from the present
global financial crisis.
The central bank was concerned about adverse implications
due to any indisciplined lending by banks and "because of
this, we directed all banks to make a general provision of one
per cent on performing loans and advances, in November 2006,"
Cabraal told state-run newspaper Daily News.
Maintaining that the apex bank carefully formulated the
economy to face crises, and Cabraal said such policies and
practises are paying off.
The central bank has been vigilant in maintaining stable
interest and exchange rates over the last one year to protect
the domestic economy and strengthen it, he said.
"We have opened the treasury bill and bond markets to
foreign investors with carefully placed limits, while creating
a buffer to meet the threat of a sudden capital flight," he
added.
He said a limit was placed on commercial banks' borrowing
from abroad to 15 percent of their capital.
"We also issued new far reaching and landmark directions
on Corporate Governance, Limits on shareholdings, Maximum
accommodation and single borrower limits, and enforced these
new directions stringently," Cabraal said.
The Central Bank of Sri Lanka during the first 8 months
absorbed an additional US dollars 600 million from the foreign
exchange market.
He said that these foresight decisions were criticised by
the business community and now the bank's step has been
proved.
"Notwithstanding all these efforts, if this global crisis
prevails for a longer period and many countries suffer from
recession, Sri Lankan exports too could be affected, although
in a limited way because of the nature of our exports”,
Cabraal maintained.
Therefore, exporters have to be vigilant about the
situation and take the necessary measures to handle such an
eventuality, and continue to improve their productivity., the
governor cautioned. PTI TVS
housing sector advances, the Central Bank of Sri Lanka had had
started taking stringent measures on housing loans, even as
the sub-prime mortgage crisis gripped the United States in the
beginning of this year.
"We increased the risk weight applicable for housing
loans from 50 percent to 55 percent in November 2006," the
central bank Governor Ajith Cabraal said adding Sri Lanka
would not be under any major negative impact from the present
global financial crisis.
The central bank was concerned about adverse implications
due to any indisciplined lending by banks and "because of
this, we directed all banks to make a general provision of one
per cent on performing loans and advances, in November 2006,"
Cabraal told state-run newspaper Daily News.
Maintaining that the apex bank carefully formulated the
economy to face crises, and Cabraal said such policies and
practises are paying off.
The central bank has been vigilant in maintaining stable
interest and exchange rates over the last one year to protect
the domestic economy and strengthen it, he said.
"We have opened the treasury bill and bond markets to
foreign investors with carefully placed limits, while creating
a buffer to meet the threat of a sudden capital flight," he
added.
He said a limit was placed on commercial banks' borrowing
from abroad to 15 percent of their capital.
"We also issued new far reaching and landmark directions
on Corporate Governance, Limits on shareholdings, Maximum
accommodation and single borrower limits, and enforced these
new directions stringently," Cabraal said.
The Central Bank of Sri Lanka during the first 8 months
absorbed an additional US dollars 600 million from the foreign
exchange market.
He said that these foresight decisions were criticised by
the business community and now the bank's step has been
proved.
"Notwithstanding all these efforts, if this global crisis
prevails for a longer period and many countries suffer from
recession, Sri Lankan exports too could be affected, although
in a limited way because of the nature of our exports”,
Cabraal maintained.
Therefore, exporters have to be vigilant about the
situation and take the necessary measures to handle such an
eventuality, and continue to improve their productivity., the
governor cautioned. PTI TVS
