Gold, gold, gold – suddenly Sri Lanka is filled with riches!

imagesGold locked away in safes and almirahs in Sri Lanka is estimated at Rs. 5 trillion, Central Bank (CB) Governor Ajith Nivard Cabraal said this week.

At the same time (on Wednesday), Army Commander Lieutenant General Daya Ratnayake told reporters that gold seized from the LTTE during the 2009 operations would be returned to 1,900 owners by the President at a ceremony on December 4.

Following the announcement, an opposition parliament asked, “If this gold was available for the past five years why wasn’t it released earlier”?
At a symposium for bank directors organised by CB recently, Mr. Cabraal said that bankers should find ways and means to use this gold reserves effectively. Outlining an eight-point agenda for the local banks in order to be aligned with the year 2020 when the country will boast of a US$150 billion economy and a per capita income of $7000, he mentioned harnessing gold as an important point in arriving at this ambitious target.

As a first point, he told the elite banking sector directors that financial inclusion is priority.”This doesn’t mean (counting) how many Sri Lankans have a bank account, but real financial inclusion, with a purpose where people have real access to finance to do business and carry out their activities.”

Secondly, he encouraged the banks to develop new fund-based products. With shrinking margins owing to the prevailing low interest rate regime, Mr. Cabraal said the interest rates will be locked at these levels in the medium and long term.

Thirdly he wanted the banks to get involved in the infrastructure projects that are happening now. He mentioned reviving ailing businesses as the fourth point in bringing the country close to per capita of $7000. He added that banks should identify red flags when businesses might ebb low and recommended banks to have dedicated units to help them.

As the fifth point, Mr. Cabraal said the banks need to reposition themselves as soon as possible in a bid to venture outside – into the region. “You need to be the trailblazer,” he said, adding that bankers also need to reposition in order to gain from the country’s regional hub status which will come about in a few years.

He also wanted the local financial sector to join in improving the rating of the country.