Link between the banking system, innovation and rural development | Sunday Observer

Link between the banking system, innovation and rural development

8 January, 2023

Last week we featured seventy- eight-year- old Sangarapillai Naguleswaran, one of Sri Lanka’s senior-most food preservation experts and board member of the Northern Chamber of Industries who connected the often disconnected dots - between entrepreneurship, soil and human health with food security/sustainability.

In this article we widen this link to include innovation and entrepreneurship and route it to the banking system. Here we examine the sequence of a national rural development policy where the bank is a direct representative and catalyst of a nations’ upliftment through facilitation of rural capital creation, especially making use of a nation’s heritage, culture and indigenous/traditional knowledge.

In a conversation two years ago with the founder of Dilmah Tea, Merrill Fernando, it was pointed out that it took a British banker to grant him a loan without any fuss enabling the initiation of his entrepreneurial dream which led to creating a world class tea brand.

Sri Lanka has few examples of attempting to make the banking system directly reflect the pulse of the people. This notably includes the efforts of Dr. P. A. Kiriwandeniya, the founder and visionary leader of the Sanasa Movement in Sri Lanka who interwove the cooperative movement to the banking system which finally culminated in the creation of the Sanasa Bank, originally meant for every village and villager to be seen as ‘owners’ of the bank.

However, the Sanasa Bank is today run on traditional commercial banking lines (as is those such as DFCC) meant for development banking, and Kiriwandeniya’s original goal is not reflected in it although the bank has contributed to national entrepreneurship.


The idea here is how the concept of collateral is seen by a banking system dedicated to building human capital. If a people centric development is the objective, should not talent – an idea or a creation be collateral by itself? Is not will power, a strong ambition backed by practical goals equivalent to collateral, from a human development and capacity building perspective? How do we quantify or validate the above in a numeric driven sector?

In a conversation Harsha Gallage, a Sri Lankan inventor who has local and international patents for many inventions including one that would remove landmines easily as well as pluck coconuts/spray organic pest control substance, and a recent invention connected to bio-gas, he said the policy adopted by Western countries to provide loans to inventors and entrepreneurs based on their idea and invention. He noted that this assistance is provided alongside a parallel social support scheme to enable inventors to fully dedicate their lives to invention and innovation.

This was asserted by the experience of thirty-eight-year-old Sri Lankan, Shavini Fernando, residing in the United States, the inventor and Founding CEO of Oxi Wear, a device that monitors oxygen levels in the body to help patients such as those suffering from the ailment she is grappling with – hole in the heart. Despite having gone initially for medication she was fully supported by that country through a comprehensive system to support innovation, especially humanistic related ones, after she came up with the idea to create a device, based on her own difficulty, to save lives of others.

As Sri Lanka stands at crossroads with migration of its talent occurring daily (a recent overseas migration event was completely full) where it was revealed that over sixty percent of Sri Lankans wish to ‘go to any country’ to settle permanently.

Rather than blame those who leave, it is imperative that we try and rectify a very serious issue in this nation; where talent and opportunity is not equal. We have an abundance of talent, especially rural talent but no national mechanism to make use of such and hence the mass inclination to seek opportunities elsewhere.

An example of rural most talent can be seen in the following example told to this writer by a former inventors’ commissioner who served from year 2000 to 2008,Dr.L.M. Keerthi Tillekeratne about an invention of a grade five child which he cited as the best invention he saw in his tenure.

The young inventor hailed from a remote corn growing village in Anuradhapura and what was created was a small machine to clean up corn. The father was a mechanic in a cycle shop and the child grew up amidst nuts and bolts. One of the problems the corn growers had in that village was that they could not sell the corn to food industrialists because the crude methods they used by putting the corn in gunny bags and smashing it produced toxicity which was not accepted by buyers. This young genius knew this and created a near perfect contraption which cleaned up the corn without hassle. In an ideal situation this child could have become a billionaire young adult by exporting the device to worldwide corn growing countries.


There is no doubt that there are similar examples in each village. Sri Lanka has no shortage of innovative ideas. An exhibition held three months back to showcase invention linked to renewable energy organized by the All Ceylon Buddhist Congress (ACBC) and the Inventors’ Commission with support from other stake holders, proved this. For example the invention of Madusha Perera, a Colombo University 1st year student in Physics who has invented the idea for a zero carbon footprint Sea Water Power Plant hub. Perera in conversation with this writer pointed out that if a State based decision is taken to invest the needed amount – summed up to be $ 700 million that there could be uninterrupted power provided throughout the island, channeling the sea water resource based energy of the country.

If Sri Lanka is not ‘developed’ to its true people potential, it is no fault of the people.

It is the fault of a lack of a well thought out process that seeks to retain its talent within the nation, supporting and using it for national prosperity while systematically and strategically saving/earning dollars.

The talent of the people is to be harnessed and used for the people. Yet those such as Nandadasa Narayana, who earned the country a sum of Rs. 164 billion foreign exchange for 24 years as per EDB reports by making use of waste coir dust which was till then being burnt could not find the needed support for his recent Covid time invention to use knowledge of the traditional medical system for national level ‘mass scale’ disinfection. His invention was to create a variety of contraptions which allows for fumigation with indigenous herbs.

Such a system would have enabled Sri Lanka to avoid lockdowns and for establishments such as factories to function. This could have pitched Sri Lanka as a world winner of Covid (which traditional physicians around the country were researching and proving full cure within 4 days based on traditional treatments).

If we total the innovations on sustainable energy we could probably permanently solve our energy crisis in less than 5 years and export our expertise overseas.

In this backdrop recent initiatives taken to create a link between the banking sector, innovation and entrepreneurship such as the MoU between the Inventors’ Commission headed by Prof. N. M. Sirimuthu and the Regional Development Bank (RDB) under chairmanship of M. Mahinda Saliya are those that could be used for micro and macro economic development.

Sri Lanka’s problem is that the link between invention, product upgrading, entrepreneurship and marketability is erratic and from a banking angle has proven a huge loss to the sector as learned through discussions with bankers.

Apparently the loss to the banking sector through provision of loans to small time entrepreneurs (who ended up not being able repay their loans) runs into billions of rupees.

The thousands of persons who have ended up in the CRIB (Credit Information Bureau) blacklist, which includes those who have taken the loans and those who have signed for them as guarantees is an example that the banking sector has to carefully think out support schemes to the inventor/entrepreneur to make their product survive in the market to accrue profit and come up with a holistic evaluation system to assess the innovation.

Banking system

What would require is for the Sri Lankan banking system to be transformed drastically. This transformation could include merging development and commercial banking in a hybrid model which could result in a win-win situation for the bank and the entrepreneur/inventor while increasing the stakeholder realm for prioritising the capacity building of both the bankers and the entrepreneurs. Where technical training on products are concerned there are many institutes playing a vital role such as the Industrial Development Board (IDB), National Engineering Research and Development Centre and the National Science Foundation. It is therefore imperative that these institutions and others such as the Inventors Commission and the National Youth Service Council (NYSC) be identified as hubs for creating inventors, innovators and entrepreneurs and be linked in a sensible manner with banks to enable lending schemes aimed at this specific purpose. This way the liability of providing loans can be decreased as the loan provision comes with a very clear support plan.

Linked to the above point is the fact that a nation such as Sri Lanka which had an ancient knowledge base that consisted of practical applicability perfected through the Guru Kula system –Deka Puruddha (practical knowledge that comes with seeing), Kala Purudda (practical knowledge that comes with doing), and Pala Puruddha (practical knowledge that comes with expertise through practice) is today webbed in theoretical exam taking. Hence the opportunity for expansive creativity in thought is non- existent which reflects not only in rote learning but in rote professionalism with little or no room for inspiration and robust thinking. This is in contrast to countries such as Finland and Japan.

Finland, which ranked number one in the 2018 Happiness index, is hailed to have the best education system in the world- that does not hype stress triggering exam taking and competition but rather uniqueness in thinking and cooperation, thus boosting creativity. Hence it is only natural that Finland had a record year in 2021 where foreign venture capital investors doubled their investment with 182 Finnish start ups receiving venture capital investments, as highlighted in Business Finland.

Therefore, it is important that Sri Lanka places emphasis on creative-capacity building of young banking professionals so that they could break free of fixated views and form a new trend in being able to assess and evaluate innovation of youth without killing off such ideas based on mechanical evaluation.

A mind dulled by rhetorical professional theoretics cannot assess nor assist in creative thought leadership.

Sri Lanka has innovation in its psyche which is how our ancient engineers managed to route water bases to the high rock of Sigiriya, a feat which to date confounds international water engineering experts. However, because we have not used our past for an innovative post independent education model, Sri Lanka has to make do with creating mere windows of creative opportunity in diverse sectors aimed at novel applications.

Thus, it is vital that the banking sector seriously considers a research unit dedicated to studying innovation where among the specified tasks would be to daily scan international newspapers to keep a track of inventions/innovations and unique entrepreneurship as well as policy initiatives in diverse sectors around the globe. Without such exposure local banking professionals will not be geared to understanding creativity and would only contribute to sending innovations that could benefit this land to other nations.

Along with the banking sector, institutions that authorise product approval based on established ‘standards’ should keep up with world trends and what should be rationally accepted. For example, a traditional food inventor, Priyanthi Mallika has over 100 patents for indigenous ingredient based health focused ‘ice cream’ that is a goldmine for diabetes patients. It has no artificial sweeteners or sugars, drawing its taste from the natural core ingredients; for example the ice cream make out of Siyambala.

However, she faced difficulty getting her product formally approved as an ‘ice cream’ by Lankan food related authorities concerned because it lacked the high sugar content present in mass-scale commercial ice creams (while the developed world is moving away from sugar heavy ice-creams)! Without due approval of official institutes certifying food products, an inventor and entrepreneur such as Priyanthi would not be able to get banking assistance.

In the light of the above the following is recommended:

1. For the banking sector to stop being insular and collaborate with other sectors/ institutions to create a cohesive network of public service to educate and build capacity of both bankers who approve loans and entrepreneurs who seek loans as well as institutes which approve products. Such a network could result in inane decisions being scrapped and replaced with sensible progressive common sense.

2. For innovative banking products (loan types and diversified sector based saving accounts) to be created. For example, one of Sri Lanka’s problems in general IQ of its youth is that reading is not a habit and English based reading is a luxury for some especially with the current rising book prices. In this background there is much room for innovation; to link the knowledge sector and banking sector such as what D. C. Kizhakemuri, one time secretary of the Sahithya Pravarthaka Co-operative Society did in Kerala where he managed to initiate diverse schemes to provide loans for people to build up home libraries (and worked with authors to make writing a profitable entrepreneurial venture), and inspired banks to work on these lines. It would be of great interest to a banker to study how Kizhakemuri subsequently launched the biggest book chain in the country followed by a media division that publishes 5 magazines.

3. Among Sri Lanka’s maladies is that our teaching of practice oriented subjects such as entrepreneurship is confined to theoretics and restrained to a university degree achieved by exam taking. To change this it is recommended that any bank that feels it should be geared to rural development to start its own entrepreneurial advancement coaching unit in collaboration with entities such as universities aimed at practical training for entrepreneurs on the importance of marketability of their products to see that they do not fall under the CRIB. This will address Sri Lanka’s biggest banking based lament where a large segment of the population who starts off as entrepreneurs end up being blacklisted for life, being plunged into the CRIB and prevented from dealing with any bank thereafter.

4. There is even scope to start a practice based university merging education, aesthetics, agriculture, natural resource protection, heritage, innovative banking, entrepreneurship and industry.

5. Tourism in Sri Lanka is generally the mere building of luxury buildings. The heritage and holistic people based vast scope for innovation is lost because tourism proposals being put up for loans being judged within a narrow cocoon. It is thereby recommended that the banking sector creates routine brainstorming discussions with small time tourist providers on the creative capacity maximisation in tourism through support of the banking sector.

6. Creating a tourist sector dedicated sub division of banking could enable the transformation of home tourism into ‘living heritage’ based concepts. For example traditional dancers, mask makers, puppeteers, traditional farmers, writers, musicians and so on could be supported by a tourism specialised dedicated banking sector to extend their homes with one or two units that would be in line with their craft and blending into village tradition. This could transform and revive the entire country’s rural heritage based economy and create an international ‘people based’ brand in tourism.

7. This would also salvage national heritage in practice (intangible cultural heritage). Such a banking related endeavour could be managed by a ministry such as the Ministry of Culture/Heritage.

8. Food security and economy is interwoven. Food security policy in Sri Lanka should be aimed at reviving the neglected and abandoned traditional agriculture systems and reviving of climate hardy indigenous crops that require no exodus of dollars for chemical fertiliser. A specialised system of village focused loan schemes that follows a daily or weekly repayment model could ease the problem of the rural farmer and agro entrepreneur getting into the CRIB. If encouraged, there could be a host of food security based inventions that could spring up from our villages and this could be done by the school inventors clubs initiated by the Inventors Commission.

9. The above ideas could be linked to a development media concept initiated at national level. This could be carried out in all three languages using especially State media in the genre of electronic, audio visual and print medium and interspersed with media units of different universities. Working with mass communication students around the island this could usher the social change Sri Lanka needs through the realm of development journalism. Done properly, with commitment, thought stimulation and practical insight, Sri Lanka could be a model for South Asia which has an acute vacuum in development journalism and journalists of the ilk of P. Sainath (author of Everybody Loves a Good Drought).

10. Such a local model could espouse interests of the average citizen, especially the rural dweller, create a new generation of development journalists dedicated to making national policymaking reflect the voice of the people and the banking system transformed to represent the heart of the nation.

To lament that Sri Lanka lacks development banking or development journalism is to no avail unless we do something about it. And if there is any time that merits it direly, it is now.

Frances Bulathsinghala is a communication specialist who promotes rural livelihood advancement and national unity through the use of traditional knowledge as a source of innovation.