COLOMBO Clear policies for domestic production will ease the impact of over reliance in global economic conditions says Bingumal Thewarathanthri, CEO of Standard Chartered Bank Sri Lanka.
The Government in recent times has intensely concentrated on encouraging businesses to enhance domestic value addition and to gradually reduce reliance on global markets.
Prior to the COVID-19 impact itself, world economies had started evaluating the impact of deglobalization, where many countries transformed their outlook towards ‘closer to home’ supply chains and concentrated on regional neighbors rather than the distant relatives. The Pandemic indeed fast forwarded the process where economies were forced to retract from relying on global support and started favoring domestic supply chains that improve security and economic resilience. Sans a confirmed solution to the COVID-19 situation, complete reliance on global trade may not support any economy. The Sri Lankan Government is also rolling out initiatives to support local manufacturers and more concessions are expected in the National Budget reforms to be read in Parliament in November 2020.
Colombo Times approached a veteran banker and the Chief Executive Officer of Standard Chartered Bank, Sri Lanka, Bingumal Thewarathanthri, to understand his perspectives on the how the Sri Lankan economy can weather the storm created by this Pandemic and the initiatives taken by one of the leading foreign banks in Sri Lanka during this COVID-19 recovery phase.
Bingumal, is the first Sri Lankan national to be appointed to the position of Chief Executive Officer (CEO) of Standard Chartered Bank, Sri Lanka. Apart from his role as CEO, he also heads Sri Lanka’s Commercial, Corporate and Institutional Banking (CCIB) business. Having joined Standard Chartered in July 2004, Bingumal counts for more than 25 years of experience within the Banking and Finance industry. During his tenure at Standard Chartered, he has held several leadership positions in Sri Lanka and Africa, including the role of Head, Transaction Banking in Mauritius, where he was responsible for setting up the Transaction Banking business for the franchise. He was also responsible for setting up the Financial Institutions booking centre for Africa and managed investments going in to Sub Saharan Africa via the Mauritius Securities Services hub. Prior to his appointment as CEO, he headed the Retail Banking business in Sri Lanka. He holds an MBA from the University of Wales, UK.
On being a self-sufficient economy, Bingumal mentioned that “From about 2015, many economies have retracted from globalization and each economy is attempting to be self-sufficient. COVID-19 has made that happen much faster than one would have expected. Hence, we need to concentrate on encouraging local manufacturers and local businesses.”
Further he emphasized the need for foreign direct investments (FDIs) in order to spark the economy “attracting FDI is something that needs to be done and FDI has been affected drastically not only in Sri Lanka but in other countries in the region too. The need is for stability and consistent policies including concessionary tax policies for investments. Creating the environment conducive for foreign investments is key”.
Bingumal shared enlightening views on many pertinent areas. Excerpts of the interview are as follows.
Q1: Due to COVID-19, Sri Lanka’s major economic activities such as exports, tourism have been drastically hit. In your view, what are the key strategies that the policy makers must adopt to revive the economy?
A1: The government has taken several measures to manage the economy during the COVID-19 pandemic situation, such as Moratoriums offered to struggling sectors of the economy, increasing liquidity in the market by reducing the required statuary reserves ratio banks need to maintain and measures undertaken to protect the government foreign reserves.
Amidst a lack of foreign exchange income, placing restrictions on imports being one such measure has ensured that our reserves position has clearly seen growth since the country went into lockdown. This initiative could be further improved with more clarity on the tenor of the restrictions to minimize the impact on trade related revenue.
The pandemic has also reminded us on the vulnerabilities of a market which is export-led and heavily dependent on tourism and worker remittances. Clear policies for domestic production will ease the impact of over reliance on global economic conditions during subdued global economic activity.
Nevertheless, improving on Sri Lanka’s economic outlook from negative to stable is critical at this juncture for the revival of the economy. This will assist in attracting FDI and other investments into the country which is essential for the development of the economy.
In the long run, consistency in policy, improving on turnaround time on setting up business and removing red tape for foreign businesses to set up operations with regards to tariff and necessary approvals will see the economy activity thrive.
Q2: What changes in business has Standard Chartered Bank in Sri Lanka adopted in this recovery phase from COVID-19 to meet the client requirements?
A2: The Bank announced globally that it will commit USD1 billion of financing for companies that switch their production to provide goods and services to help the fight against the pandemic. Under this scheme, Sri Lanka has provided financing close to USD45 million to local organizations to produce personal protective equipment for the export market.
Further, the Bank in aims to provide relief to those individuals and businesses impacted by the pandemic by providing the government-introduced moratoriums. Extended credit periods were also offered beyond the stipulated moratorium terms as an additional commitment to support our clients.
We are also looking at an aggressive asset drive to promote domestic production which will in turn help revive the economy.
Q3: To curb the impact on businesses due to COVID-19, the SL Government responded with several schemes such as the debt moratorium, working capital loans, relaxation of statutory deadlines for payments / filing of documents for tax purposes etc. This is perceived by many as short-term strategies and that businesses are falling into further debt. Your views on the same.
A3: Every market has introduced fiscal stimulus to ensure that the economy will not collapse due to the pandemic. These types of measures are essential to protect the vulnerable sectors in the economy and to enable them to survive till the economy bounces back.
However, during this time, the Government has also restricted banks to operate freely in charging interest rates on lending products. In particular, the credit card interest rate was reduced by 10%. This leads to margin pressure on the product which causes enormous pressure on profitability of the Banking sector amidst rising NPL. Stability of the Banking industry is essential for a stable economy in any country and these types of actions cause vulnerabilities in the sector.
Q4: Due to COVID-19, many banking systems and processes had to be digitally enabled within a short time frame. Cyber security continues to be a key concern. How has Standard Chartered Bank in Sri Lanka managed this risk?
A4: In times such as these, it is known that adversaries look at exploiting vulnerable situations as COVID to lure users into opening malicious websites, file attachments and links. The SC Group and country took several measures to keep the Bank safe from these malicious practices.
The Cyber Defense Centre (CDC) has been placed on high alert and we have heightened our cyber security monitoring. The CDC and Application & Infrastructure Vulnerability Management Team receive regular intelligence briefings from our internal Cyber Threat Intelligence Team, and our fellow financial institutions and industry partners. Using this intel, we closely monitor COVID-19 themed threats – mostly phishing and malware, and any critical exploits.
We have also taken measures to heighten security at the ground level. Awareness amongst our staff continues to be increased via regular awareness messages being shared, close monitoring of COVID-19 themed emails being delivered to staff, detection and blocking of any malicious / suspicious emails to staff.
Additionally, VPN devices were deployed for staff working from home after rigorous security testing. These device logins require an additional multi-factor authentication, a one-time password, apart from the user credentials and digital certificate, while security monitoring use cases are in place to alert the CDC of anomalous VPN login activity.
Q5: As a foreign bank what are the best practices adopted during this phase in managing employees and providing them a safe working environment?
A5: Health and safety of our employees is of utmost importance to us always. During the pandemic, this was no different. At the very start of the pandemic, even before Sri Lanka was impacted, we at Standard Chartered took measures to ensure that every precaution was taken for the safety of our employees. The country crisis management team discussed on the way forward at every development during the pandemic.
At first, employees were requested to report any overseas travel, be it official or personal with the HR team. These employees were requested to work from home for 14 days post returning to Sri Lanka.
When the first few infected patients were identified in the country, the Bank opted to adopt split operations and work from home for all staff. Staff in critical functions used a split operation, while non-critical staff were requested to work from home.
During this time, mandatory temperature checks, foot bath and hand sanitization were introduced at the entrance of the Bank, while a planned procedure for suspected / probable and confirmed case was introduced. Employees who reported to work were provided with face masks and personal protective equipment for those coming into contact with clients. Two-meter distance between seating arrangements were also mandated throughout the Bank.
During lockdown period, staff was provided with transport to and from home and an allowance of Rs. 2,000 per day was paid for any critical staff that were required to report to office.
Post the lockdown period, social distancing protocols are still being adhered to to ensure the safety of our employees. We also encourage our people to work from home for a couple of days of the week.
Interviewed and compiled by Rifka Ziyard, Director – Tax & Regulatory, at KPMG. She is a Fellow Member of the Chartered Institute of Management Accountants, UK, Chartered Global Management Accountant (CGMA), Fellow member of the Sri Lanka Institute of Taxation, and has a MBA and a Bachelor of Commerce from the University of Colombo. She is also the Chair of the CIMA Sri Lanka Network Panel.
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