The Sri Lanka economic acceleration framework 2020-25 formulated by the Ceylon Chamber of Commerce has also focused on issues faced by the financial sector and the capital market, recommending a set of policy actions to be taken by the authorities to make it a vibrant sector, former President Stock Brokers Association Ravi Abeysuriya said.
“The financial sector and the capital market is grappling with several issues. Both need reforms in term of structural reforms and problems in the supply and demand sides need to be addressed.
The key recommendations on the financial sector and capital markets by the Ceylon Chamber of Commerce have provided a pathway to address these issues including the non-banking financial institutes, covering the entire spectrum of the financial system,” he said.
The framework will facilitate financial inclusion and the need to increase the bankable community while providing access to finance to the SME sector. We need to have more products in the capital market as well as a properly functioning capital market which is capable of meeting long-term funding needs. The country also needs an efficient banking system which mobilises more deposits and savings to fuel the growth of the national economy, he said.
The Ceylon Chamber of Commerce recently launched a working draft - ‘Sri Lanka Economic Acceleration Framework 2020-25’ to build a USD 135 billion economy by 2025. The framework was introduced by its chairman Dr. Hans Wijayasuriya during the economic summit recently, which focused on re-calibrating Sri Lanka’s economic trajectory.
Recommendations have been made by the financial sector and capital markets working group for the proper functioning of the banking, non-banking, and capital market institutions. The recommendations for the banking sector are to have a consistent policy framework on bank taxation and a long-term view in application of bank taxes and tax rates, to reduce the high cost of bank intermediation by addressing the delays in the legal system and introducing bankruptcy laws, a new framework for all interest subsidy schemes, a credit guarantee scheme for the SME sector, introduce a policy framework that motivates the voluntary consolidation of financial institutions, and the Central Bank to facilitate e-KYC through ‘Face-Recognition Apps’ to facilitate e-banking.
The recommendations for the capital market are to fast track the passing of the SEC Act to facilitate the demutualisation of the stock exchange, establishment of the Central Counter Party, Delivery vs
Payment System, and new capital market products and services to be introduced to gain wider retail investor participation in the stock market, listing minority stakes of State-Owned Enterprises thus expanding the potential of the equity market, pension and provident funds to have more broadly diversified portfolios with strong fund management abilities, brokerage industry consolidation where market intermediaries deal in all capital market products and to fast track the implementation of Collective Investment Scheme (CIS) code to enable ETF and REITs and review of existing taxation framework.
The recommendations for the non-banking financial institutions are: introduce policy framework that promote voluntary consolidation, formulation of policies to encourage the development of NBFIs to serve the unbanked sector.