May 31, Colombo: The progress in the consolidation of the financial sector to create a stable financial sector with strong and dynamic financial institutions has been satisfactory during the month of May 2014, the Central Bank said Friday.
Sri Lanka's Central Bank has initiated action on consolidating the financial sector as proposed in the 2014 budget by the President and presented in the Bank's Road Map for 2014.
The global rating agency, Fitch Ratings said Sri Lanka's plan to consolidate banks would boost economic development and raise systemic stability in long-term.
According to a statement released by the Bank, the three mergers between the National Development Bank PLC and DFCC Bank, subsidiaries of Bank of Ceylon and the Merchant Bank of Sri Lanka PLC, and the merger between MBSL Savings Bank Limited and MCSL Financial Services Limited are expected to be completed within the planned timelines.
Non-banking financial institutions (NBFIs) that include finance and leasing companies falling under the same group have also initiated the consolidation process and certain NBFIs have shown interest to infuse fresh capital to enable them to meet the enhanced capital requirements.
All banks and NBFIs were requested to submit their finalized plans for consolidation by 30 June 2014 in order to ensure the consolidation process is completed within the planned timeline.
During the month, senior officials of the Central Bank continued to participate in various forums on financial sector consolidation. The Central Bank said it continued to exchange views with all stakeholders of the consolidation process and closely monitor the progress being made.