The SAARC finance outfit, comprising central banks of SAARC countries, will meet twice a year, said deputy governor of Central Bank of Sri Lanka W A Wijewardena. The meetings will coincide with the annual meeting of the International Monetary Fund and the World Bank.
“There is a necessity for all central banks across the globe to get together and have a common approach to bring about stability in entire financial system,” he noted.
Speaking to FE on the sidelines of the FICCI-IBA conference on “Global Banking: Paradigm Shift” held in Mumbai on Friday, he said, “Instability in one country can affect the stability of many others. We seek to prevent such a domino effect in future, especially in the SAARC nations.”
“Also, we are expected to sign a comprehensive economic partnership agreement with India. This agreement will be an improvement on the free trade agreement which we had signed in 1997. The move will allow the financial sector in India and Sri Lanka to integrate with each other,” he added.
Commenting on the Sri Lankan regulator’s stance on issuing branch licenses to the foreign banks, Wijewardena said, “We have adopted a very open policy regarding this issue. Indian banks like State Bank of India, Indian Bank, ICICI Bank and Indian Overseas Bank have successfully set up their operations on Sri Lankan shores.?
?Any bank that approaches us in future with at least $25 million as paid-up capital will be allowed to penetrate into Sri Lanka on a merit basis.”
He added that “many Indian banks have approached us in the recent past”, and that the regulator is considering their applications.
“Also, in Sri Lanka, there are a few small banks that need capital. These could be potential takeover targets for Indian banks,” he said.
“Apart from the Bank of Ceylon that is currently functioning in Chennai, three other Sri Lankan banks have also shown a keen interest to branch out in India in the near future,” he said.