Development bank essential for SL at current juncture: HNB chief

The importance of establishing a fully-fledged development bank was stressed by Hatton National Bank PLC (HNB) MD/CEO Jonathan Alles, as Sri Lanka explores multiple avenues to achieve stable economic growth.

“Time is very opportune for us to have a development bank, which actually has a collaborative long-term partnership and engagement to win the likes of the Asian Development Bank (ADB), World Bank (WB) and others, in order to look at structures,” said Alles, at the KMPG post-budget forum held yesterday.

“Whether it is for guarantee or for long-term equity, where we reduce the risk in doing this business without just limiting it to being a leveraged proposition only,” he added.

Alles stressed that Sri Lanka at this moment needs a development bank “very badly”, since commercial banks, at the end of the day, build their portfolio with deposits from customers and investors, who expect returns.

Budget 2021 proposed the setting up of National Development Banking Corporation (NDBC) that will be achieved by merging Housing and Investment Bank, Housing Development Real Estate Limited and Regional Development Bank.

According to Alles, if this endeavour is targeted as a development bank and is executed properly, the effort will be 
a success.

“This is a great initiative and is a must as part of the pro-development budget. It makes a lot of sense to do this business and in addition to the supportive and legal environment that we, as private commercial banks, could create for the start-up, we look at this holistically,” he shared.

Alles pointed out that what would make this a holistic proposition is the formation of an SME and a microfinance framework for the country that has the proper legal and regulatory structure.

The senior banker stated that another positive stemming out from the budget is that the grace period and the initiative proposed for start-ups are in the right direction to get them off the ground.