Roadmap ready to merge two local housing banks

in its assets. Regulatory capital ratios benefit from zero risk weights accorded to housing loans backed by EPF balances. HDFC Bank which is 51 per cent owned by the state is required to meet a minimum capital requirement of Rs. 5 billion as a licensed specialised bank by 1 January this year, but the regulator has extended this timeline by two more years.

Mr. Wickramaratne said that smaller banks including Divi Neguma, Lankaputhra and Regional Development Bank – some of which are to be merged with each other to set up a stronger financial institution, also need more capital. He added that in terms of the main three state banks - People's Bank, Bank of Ceylon and National Savings Bank, they are drawing up a plan for what their capital requirement will be for the next few years. "The Ministry has done a study on what their future capital requirement will be. They themselves have an ongoing process to strategise their future and we'll work with the Central Bank on restructuring these three banks."

The banking sector comprises 22 local banks and 12 foreign banks.

The HDFC Bank’s capital ratios have been declining alongside the expansion in its assets. Regulatory capital ratios benefit from zero risk weights accorded to housing loans backed by EPF balances. HDFC Bank which is 51 per cent owned by the state is required to meet a minimum capital requirement of Rs. 5 billion as a licensed specialised bank by 1 January this year, but the regulator has extended this timeline by two more years.