OVERVIEW OF BANKING INDUSTRY IN SRI LANKA

Banking Sector

The banking sector in Sri Lanka, which comprises Licensed Commercial Banks (LCBs) and Licensed Specialized banks (LSBs), dominates the financial system and accounts for the highest share of the total assets in the financial system. Banks play a critical role within the Sri Lankan financial system, as they are engaged in provision of liquidity to the entire economy, while transforming the risk characteristics of assets.

Banks also engaged in providing payment services, thereby facilitating all entities to carry out their financial transactions. On the other hand, banks can create vulnerabilities of systemic nature, partly due to a mismatch in maturity of assets and liabilities and their interconnections. Therefore, the soundness of banks is important, as it contributes towards maintaining confidence in the financial system, and any failure may have the potential to impact on activities of all other financial and non-financial entities, and finally the economy.

In terms of the asset base and the magnitude of services provided, the LCBs are the single most important category of financial institutions within the banking sector. LCBs dominate the financial system with the highest market share of the entire financial system's assets. Therefore, the health of Sri Lankan financial system depends to a large extent on the soundness of the LCBs, primarily on the performance and financial strength of the six largest LCBs, generally referred to as the Systemically Important Banks (SIBs).

The systemic importance of the LSB sector is relatively low in comparison to the LCBs, both in terms of size and their impact on the financial system, as it does not play a major intermediary role in the payment cycle.

Banks are the cornerstone of a national financial system. Their key services are to provide a safe haven for the earnings of individuals and to make loans to companies in need of capital, either to start, operating or to stay in the business. By channeling savings into the business sector through loans and also offering loans to individuals to enhance their lifestyles, banks boost overall economic growth and development.

Licensed Commercial Banks

Nowadays, 26 commercial banks has established in Sri Lanka.

 https://www.cbsl.gov.lk/authorized-financial-institutions/licensed-commercial-banks

1	Amana Bank PLC	14	Indian Overseas Bank
2	Axis Bank Ltd	15	MCB Bank Ltd
3	Bank of Ceylon	16	National Development Bank PLC
4	Bank of China Ltd	17	Nations Trust Bank PLC
5	Cargills Bank Ltd	18	Pan Asia Banking Corporation PLC
6	Citibank, N.A.	19	People's Bank
7	Commercial Bank of Ceylon PLC	20	Public Bank Berhad
8	Deutsche Bank AG	21	Sampath Bank PLC
9	DFCC Bank PLC	22	Seylan Bank PLC.
10	Habib Bank Ltd	23	Standard Chartered Bank
11	Hatton National Bank PLC	24	State Bank of India
12	ICICI Bank Ltd	25	The Hongkong & Shanghai Banking
13	Indian Bank	26	Union Bank of Colombo PLC

Licensed Specialized Banks

According to the Central Bank of Sri Lanka, There are 7 specialized banks in Sri Lanka.

https://www.cbsl.gov.lk/authorized-financial-institutions/licensed-specialised-banks

1.     Housing Development Finance Corporation Bank of Sri Lanka (HDFC)

2.     Lankaputhra Development Bank Ltd.

3.     National Savings Bank

4.     Pradeshiya Sanwardhana Bank

5.     Sanasa Development Bank PLC

6.     Sri Lanka Savings Bank Ltd

7.     State Mortgage & Investment Bank