Banks to cease leasing from June, charges on cash withdrawal: Budget 2016

commercial-bank

Nov 20, 2015 (LBO) – Sri Lanka’s banks have been asked to cease leasing activities from 01st of June next year while pawning should be limited to five percent of total loan portfolio, Finance Minister Ravi Karunanayake said in Parliament.

“Honourable Speaker, I propose that licensed banks should concentrate on their core banking activities,” Karunanayake said.

“The Leasing business, has become a distraction to core banking functions and as such banks should cease in engaging in leasing business from 01 June, 2016.”

Speaking later a forum organized by KPMG, Karunanayake said: “Any company, we have given certain time for them to move out. It can be a standalone company, but cannot be linked up to the group company.”

Karunanayake added that banks are not keen to lend to certain important sectors of the economy, which has hampered the growth of these sectors.

“Our banks have confined themselves to collateral based lending and have shown a marked reluctance to engage in ‘business model’ based lending,” he said.

“In this background, I propose that all the banks should lend at least 10 percent of their loan portfolio to Agriculture, 5 percent to SME and 5 percent to Women and Youth,” he said.

Given the impact the international gold prices has had on the local banks specially with large pawning portfolios, the banking sector also asked to limit their pawning business to a maximum of 5 percent of their loan portfolios.

However he encourage banks to lend to customers who are engaging in stock market activities.

The budget 2016 also imposed 2 percent charge for 1-10 million rupee cash withdrawal and 3 percent charge on above 10 million withdrawal.

There will be no charge for the withdrawals less than one million.

“To discourage cash transportation in line with security considerations, I propose to impose following charges on cash withdrawals. Less than 1 million, no charge. Between 1 million and 10 million, 2 percent. Above 10 million, 3 percent, he said.

Karunanayake proposed the fee on bank drafts should not exceed 150 rupees per draft.

All employers have been asked to instruct their employees to open bank accounts for the purpose of remitting the salaries.

All banks were required to expand their branch network by 15 percent by opening branches in lagging regions to address the imbalance in the accessibility to finance which created by over banking in urban areas and under banking in regions.

Each of these branches will have to employ at least 6 employees.

 

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DSL Ferdinando
DSL Ferdinando
6 years ago

When you say withdrawal is it a debit or simple cssh withdrawal over the counter.
If is it debits then share purchase too will be charged.What about transferring from current account to deposits .it is a debit but not a withdrawal from the bank

Sam
Sam
6 years ago
Reply to  DSL Ferdinando

It is physical cash withdrawal by means of currency notes. Government is trying to route transactions through electronic or other methods of fund transfers available in Banking System. This will control movement of black money. High value transactions could be brought under tax-net. To facilitate this, banks are instructed not to charge more than Rs. 150/- for issuance of Demand Drafts.

Dhanushka
Dhanushka
6 years ago

Budget says “We are moving into a sophisticated cash management system. To discourage cash
transportation in line with security considerations, I propose to impose following charges on
cash withdrawals.” – When reporting news try to report in full. You should have included the reason for this proposal to avoid misunderstandings. I had to search internet to clarify doubts which is not an entirely satisfying experience.

tux
tux
6 years ago

How is a withdrawal defined? as a single debit or time bound?

expat
expat
6 years ago
Reply to  tux

errr look at the charge . lkr 1-10 mio 2% and over 10mio 3%.

how many people withdraw those figures every day of the week???

the idea is to reduce the use of cash. he is trying to fight the helmet thieves LOL

wont be surprised if it is changed in a little while, like his mansion tax.

its the tale of a monkey with a razor blade DUH