We will be looking more into corporate banking sector: NSB Chairman
The state-owned National Savings Bank (NSB) will be looking to increase its presence in the corporate banking sector, a top official said.
“We will be looking into the corporate banking sector. Particularly how we can augment our dependence on the net interest income,” NSB Chairman Aswin de Silva said.
While the National Savings Bank Act stipulates that 60 percent of the bank’s deposits be invested in government securities and of the remainder, 95 percent is focused on personal banking, with the rest a mixture of foreign exchange, corporate, etc., according to de Silva.
“We can’t bring it down to 60-65 percent like in a commercial bank. We’re a licensed specialized bank. Probably bring it down to 85 percent and replace that with corporate banking and credit finance, fee-based income and foreign exchange,” he said.
De Silva articulated that state banks have to step up to compete with commercial banks in this regard or perish, since commercial banks are now entering into long-term lending.
“We can’t have situations where they are entering into our territory and we are not doing anything to protect that. We have to change with that or we’ll find that the competition has eaten us,” he said.
He noted that the monopolies in certain banking sectors, which existed 40-50 years ago, do not exist anymore.
Meanwhile, de Silva stressed that state banks should immediately adopt the international trends of lending based on a person’s ability to repay rather than through collateral.
“I want to change that credit culture to a more cash-flow driven credit rather than collateralized credit, so that we lend money to a person not because he has a house to mortgage but because he has the cash flows to repay. There might be a situation where his house faces foreclosure. We’re helping him. He loses, we lose,” he said.
He expressed that it would not take long for the state banking sector to adopt these changes if given direction.
De Silva, a Chartered Accountant, took over the Chairmanship in March and is attempting to inject the culture of the private sector into NSB, especially t hrough i ncreased automation and productivity gains to boost profits.
Prior to joining NSB, he was acting in a senior managerial capacity in Sydney, Australia in the corporate sector. He had held prolific posts in the financial sector in American Express, Ceylinco Savings Bank and Associated Motorways.