C.M.K.LiyanageAG/2009/2786

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Content page

1. Introduction 3

2. Classification of Bank 4

Commercial Banks 5 Savings Banks 14 Merchant Banks 16 Investment Banks 20

3. Central bank of SriLanka 21

4. The objectives of the Central bank 22

5. The Functions of the Central bank 23

6. Credit control by the Central bank 23

7. Exchange Rates 24

8. World Trade Organization 25

9. International Monetary Fund 26

10. References 27

Introduction

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Banks in SriLanka

The banking sector is one of the most important sections of an economy of any country. In the modern world all the financial systems are depending on the banking sector. Now a days banks are not only play a role of loan supplier or money Deposit, savings holder. Modern banks serve various kinds of services for their valuable customers.

There are four major type of banking systems available in Sri Lanka under the supervision of Central bank of Srilanka.

Commercial Banks Merchant Banks Investment Banks Savings Banks

The central bank is the apex institution in the financial system of Sri Lanka. There are 26 commercial banks in operation in the country. 10 of these are locally incorporated and the balances are branches of foreign banks. Two of the local commercial banks are state owned.

Merchant/ Investment Banks offer a wide array of services including identification and financing of project, leasing, bill discounting, underwriting share issues, margin trading facilities, loan syndication, bridging finance, participation in project equity, other forms of project finance, managing private share issues /placements, financial and management consultancy services etc. There are 10 such banks in Sri Lanka at present.

The Savings Bank’s primary activities are accepting various savings deposits from public, investing in government securities, and investing in long-term debt instruments.

1. Classification of Banks

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Commercial Banks

State Owned banks Private

Banks

Savings Banks

Investment Banks

Merchant Banks

Commercial Banks

CentralBank

A commercial bank is a type of financial intermediary. Business Banking is another term for Commercial banks. This type of banks provides checking accounts, savings accounts, and money market accounts and that accepts time deposits.

Many banks offer both commercial and retail banking services. But Commercial banking may also be seen as distinct from retail banking, which involves the provision of financial services direct to consumers. In Srilanka all commercial bankes are controlling under the supervision of Central Bank of Srilanka.

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People’s bank

Bank Of Ceylon

Sampath Bank

Commercial Bank Of Ceylon

Hatton National Bank

Seylan bank

Nation’s Trust Bank

Union Commercial Bank

Pan Asia Banking Corperation

NDB Bank

DFCC Bank

The Functions of Commercial banks

Commercial banks engage in the following activities.

1. Accepting money on term deposit 2. Lending money by overdraft, installment loan, or other means 3. Providing documentary and standby letter of credit, guarantees, performance

bonds, securities underwriting commitments and other forms of off balance sheet exposures

4. Safekeeping of documents and other items in safe deposit boxes 5. sale , distribution or brokerage, with or without advice, of insurance, unit

trusts and similar financial products as a “financial supermarket” 6. Cash management and treasury services 7. Merchant banking and private equity financing 8.9. Traditionally, large commercial banks also underwrite bonds, and make

markets in currency, interest rates, and credit-related securities, but today large commercial banks usually have an investment bank arm that is involved in the mentioned activities.

10. processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means.

State Owned Commercial Banks

There are two state owned Commercial banks in Srilanka. They are,

1. Peoples Bank

2. Bank of Ceylon

People’s Bank

Vision

To be the Bank of the aspiring People of Sri Lanka: empowering people to become value creating, competitive and self-reliant.

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Mission

For CustomersTo take pride in providing an excellent service in the most caring, responsive and professional manner.

For OwnersTo generate benefits for the national economy whilst being independent and commercially viable.

For EmployeesTo create opportunities for our employees to benefit from their high performance by becoming value creating, skilled, self confident and professional individuals who are also team players.

For SocietyTo support empowerment and sustainable development by contributing to the upliftment of education, culture and environment island wid

 Service Profile

Savings Products Harvest Savings Account Infants - Isuru Udana Minors - Sisu Udana Young Savers - YES All those who wish to make their dreams come true - Jana Jaya Ladies - Vanitha Vasana Senior Citizens - Parinatha For maximum benefits - People's Bank MAX Senior Citizens Pilgrimages - Vandana Teachers - Guru Setha Health Sector Employees - Suwa Sevana Regular Savers - Investment Savings General Purposes - Ordinary Savings A/c. (Single/joint) Institutions

o Co-operatives o Partnerships o Sole Proprietorship o Limited Liability Companies o Corporations o Statutory Bodies

Current Accounts

Personal Accounts - Individual

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Personal Accounts - Joint Business Accounts - Sole Proprietorship/ Partnership/ Limited Liability

Companies / Statutory Bodies

Loan Products Education - (Local to Abroad) Purchase of Vehicles Any Purpose Loan A comprehensive Housing Loan Scheme - Jaya Nivasa Consumer Durables from Selected Reputed Companies Purchase of Vehicles PALS for Professionals Waidyasiri Loans Suwa Sevana Loan Scheme for Health Sector Employees Guru Setha Loan Scheme for Teachers Big Buy Scheme for Govt. / Corp/ Statutory Board Employees Loan Scheme for members of local Government Loan Scheme for Telecom Employees Pensioners Loans Loan/ Over draft against deposits Videshika - Loan scheme for Employees Abroad Business Loans - Tourism/ Commercial Loans - Vanitha Vasana Swarna Pradeepa

Other Services

Money Transfer (Inter Branch) ATMs / Operation Facilities using Cards Credit Cards Slips - Funds Spreading International Money Transfers

Foreigen Currency Accounts

Special Foreign Investment Deposit Account (SFIDA) NRFC Accounts NRFC Fixed RFC Accounts RFC Fixed RRFC RNNFC Accounts Sierra People's eRemittance

Bank Of Ceylon8

Since in 1939, Bank of Ceylon play a major role in srilanka economy. It has,

305 Local Branches

03 foreign branches

325 ATM Machines

Vision

Bankers to the nation

MissionCustomersFoster most rewarding relationship with trust and reliability for ourcustomers, exceeding their expectations.

StaffWe offer our staff, recognition and rewards to be the best team of achievers in service excellence.

OwnersAs per expectations of our owners, be a catalyst in national development, with profitability.

SocietyExtending banking service to larger society as a beneficial beacon in the country.

Service Profile

Savings Accounts

Ran Kekulu Children’s Savings

14+ Savings

18+ Savings

Kantha Ran Ginum

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Ethera Thilina

Ran Govi Thanapath

Ranawiru Ran Ginum

Foreign Savings Accounts

NRFC Savings

NRFC Fixed Deposits

RFC Savings

RFC Fixed Deposits

RNNFE

Export Foreign Currency Accounts

Current accounts

Private Commercial BanksIn Srilanka

There are several private commercial banks in Srilanka. We can put all this banks under same structure. Here we study only glance about two private banks.

1. Hatton National Bank2. dfv

Hatton National Bank10

In 1888, Hatton Bank commenced business in Sri Lanka's hill country station of Hatton, to serve the flourishing tea industry that produced the country's most famous export. Now a days it has 189 branches island wide.

Vision:

To be the acknowledged leader and chosen partner in providing financial solutions through inspired people.

 

Mission:

Combining entrepreneurial spirit with empowered people and leading edge technology to constantly exceed stakeholder expectations

 

Values:

  Treasure professional & personal integrity at all times  Demonstrate mutual respect in all our interactions  Passionate in everything we do  Committed to being customer centric  Courage to change, challenge and be different  Demonstrate unity in diversity

Service Profile

Savings Accounts

Current Deposits

Borrowing funds (housing,Education,Leasing,Credit cards)

e-banking

Project financing11

Treasurery Services

Rural credit

Micro finance

SEYLAN Bank

Seylan bank is a Bank with a Heart which established in 1987 as a Public Limited Liability Company. The theme of Bank is Just, Fair and Consistent.

Vision

"To be the leading financial solutions provider that delivers exceptional value to stakeholders"  

Mission

"To exceed customer expectations by providing competitively priced superior services through speedy and multiple delivery channels,

whilst rewarding staff through recognition and empowerment; being a responsible corporate citizen; adopting environmental friendly

practices and adding superior value to shareholders"

Values

High ethical and professional conduct Passion for excellence Courage to adapt to chang Continuous improvement Mutual respect and trust Building lasting relationships

Service Profile

Savings Accounts

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Current Deposits

Borrowing funds (housing, Education, Leasing, Credit cards)

e-banking

Seylan Leasing

Palm top banking

Foreign currency exchange

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Savings Banks

State Owned Banks

A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In some countries, savings banks were created on public initiative, while in others, socially committed individuals created foundations to put in place the necessary infrastructure. In Srilanka all Savings banks are controlling under the supervision of Central Bank of Srilanka.

Functions

The savings bank serves the man of small earnings and without capital by providing a safe place to keep his savings and an experienced agency for investing them so as to yield him an income.

The savings of the average wage-earner are usually not large enough to admit of his investing in bonds, mortgages, and other forms of investment open to the man of means, nor is the man of small income qualified by experience in such matters to select a safe and profitable investment.

But the savings bank takes these small savings of scores of individuals, which collectively amount to very considerable sums, and invests them for the depositors in such ways as to insure safety and a fair return.

It thus encourages among the masses habits of thrift and industry, and accumulates for productive uses money which otherwise would lie idle or be squandered in unwise expenditures. From the standpoint of the employment of funds also there is a wide difference between savings banks and commercial banks.

The function of the savings bank is primarily that of investment, while the commercial bank makes advances to business concerns for current needs. The savings bank invests the depositor's savings to bring profit to him; the commercial bank loans its credit to make profit for itself. The savings bank exists for the saver; the commercial bank for the borrower.

National savings Bank

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National savings Bank

National Savings Bank (NSB), is a state-owned savings bank in Sri Lanka. It was incorporated in Ceylon by the National Savings Bank Act No. 30 of 1971 and was granted the status of the Licensed Specialized Bank in terms of the Banking Act No. 30 of 1988.

It has 126 branches, 14 Postal Banking Branches, 21 NSB Piyasa and a Savings Shop.It also carries out postal banking with the cooperation of 642 post offices and 3,408 sub-post offices of the Sri Lanka Post.

Service Profile

Deposit products

Foreign Currency Accounts

Loans & Advances

Card products

Online banking

Foreign Remittences

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Merchant banks

In banking, a merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and to wealthy individuals.The term can also be used to describe the private equity activities of banking The chief distinction between an investment bank and a merchant bank is that a merchant bank invests its own capital in a client company whereas an investment bank purely distributes (and trades) the securities of that company in its capital raising role.

Both merchant banks and investment banks provide fee based corporate advisory services, including in relation to mergers and acquisitions. In Srilanka all Merchants banks are controlling under the supervision of Central Bank of Srilanka.

Functions

Primarily Merchant Banks are involved in International finance and long-term loans for multinational corporations and governments.

They provide both finance (credit) and underwriting (insurance).

Portfolio management

Leasing

Loan syndication

Project finance

Issue management

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Merchant Banks

Merchant Bank of SriLanka

Merchant Bank of SriLanka

Merchant Bank of Sri Lanka PLC [MBSL] is a public quoted company with limited liability incorporated on 4th March 1982, listed on the Colombo Stock Exchange.

Service Profile

Trade Finance

Leasing

Corporate Advisory Services

Capital Market Activities

Fund Management

Corporate Secretarial & Legal

Development Banks

A Development bank is a national or regional financial institution designed to provide medium- and long-term capital for productive investment, often accompanied by technical assistance

Development Banks or Development Finance Institutions as these are normally called in the financial world are a post World War II phenomenon.  Their establishment in Africa, Asia and other developing countries in most cases coincided with the attainment of independence.

Functions

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Provision of Capital to Industries, which can play role in economic development.

Lends money to small scale industries. Services of Mutual Funds Funds raising schemes for development companies. Project advicing services Project Management

National Development Bank

VISION

A World-class SriLankan bank

MISSION

To be dominant in the financial services sector, creating superior long-term shareholder value and contributing to economic development in Sri Lanka by

exploiting regional opportunities and delivering innovative solutions with 'best in industry' service excellence through an inspired team

VALUES   Integrity

 We believe in truth, justice and fairplay, above all else.

  Care

 We will never lose the human touch. We will care for our colleagues, our customers, our community and our environment.

   Passion  We will embrace challenges with passion and aggressively pursue our goals   Teamwork

 We will work together as a team, supporting each other, respecting every individual and drawing strength from our diversity.

   Service

 

We will always strive for excellence in serving our internal and external customers, through professionalism, innovation and creativity

Service Profile

Privilege Banking18

Savings Accounts Current Accounts Minors' Accounts Foreign Currency Accts. SFIDA Fixed Deposits eZ Pay Leasing Loan Schemes Safe Deposit Lockers VISA Debit Card Western Union Bancassuranc

Corporate Services

Project Loans Working Capital Finance Trade Services Leasing Cash Management Treasury Products Bancassurance Commercial Markets

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Investment Banks

An investment bank is a financial institution that assists corporations and governments in raising capital by underwriting and acting as the agent in the issuance of securities. An investment bank also assists companies involved in mergers and acquisitions, derivatives, etc. Further it provides ancillary services such as market making and the trading of derivatives, fixed income instruments, foreign exchange, commodity, and equity securities.

Unlike commercial banks and retail banks, investment banks do not take deposits.

To provide investment banking services in the United States an advisor must be a licensed broker-dealer. The advisor is subject to Securities & Exchange Commission (SEC) (FINRA) regulation[1]. Until 1999, the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G7 countries, have not maintained this separation historically. Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) was referred to as the "sell side".

Dealing with the pension funds, mutual funds, hedge funds, and the investing public who consumed the products and services of the sell-side in order to maximize their return on investment constitutes the "buy side". Many firms have buy and sell side components. In Srilanka all investments bankes are controlling under the supervision of Central Bank of Srilanka.

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Central Bank Of SriLanka

The Central Bank of Ceylon was set up by the post independence Government in recognition of the importance of an active monetary policy regime and a dynamic financial sector to support and promote economic growth.

The Exter Report on the rationale and the legal framework for the Central Bank was presented to the Government of Ceylon in November 1949 and led to its formation. The Central Bank of Ceylon was established by the Monetary Law Act (MLA) No.58 of 1949 and commenced operations on August 28, 1950. It was renamed the Central Bank of Sri Lanka in 1985.

The Central Bank was given wide powers to administer and regulate the entire money, banking and credit system of the country. The Central Bank was also given the sole right and authority to issue currency and it also became the custodian of the international reserves of the country.

The Vision

This vision statement clearly indicates that the Bank is deeply committed to contributing to the prosperity of Sri Lanka

.Mission

Maintaining economic and price stability and financial system stability to support sustainable growth through policy stimulus, advice, commitment and excellence

The objectives of the Central Bank

(as specified in the MLA in 1949)

a ) The stabilization of domestic monetary values (maintenance of price stability).

b ) The preservation of the par value or the stability of the exchange rate of the Sri Lankan Rupee (maintenance of exchange rate stability).

C ) The promotion and maintenance of a high level of production, employment and real income in Sri Lanka.

d ) The encouragement and promotion of the full development of the productive resources of Sri Lanka

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The objectives of the Central Bank(According to the modernization program in 2000)

1 The maintenance of economic and price stability

Price stability safeguards the value of the currency in terms of what it will purchase at home and in terms of other currencies. Price stability or stable prices means low inflation. Experience has shown that the economy performs well when inflation is low and is expected to be low. Interest rates are also low in these conditions. Such an environment allows an economy to achieve its growth potential and fosters high employment. Free from the disruptive effects of high and variable inflation, both consumers and producers make economic decisions with confidence. Low inflation or price stability fosters sustainable long-term economic growth and employment. The Central Bank uses monetary policy measures to control inflation.

2 The maintenance of financial system stability

A stable financial system creates a favorable environment for depositors and investors, encourages efficient financial intermediation and the effective functioning of markets, and hence, promotes investment and economic growth. Financial system stability means the effective functioning of the financial system (financial institutions and markets) and the absence of banking, currency and balance of payments crisis. Financial instability is caused by bank failures, excessive asset price volatility, and collapse of market liquidity or a disruption to the payments system. Financial system stability requires a stable macro-economic environment, effective regulatory framework, well organised financial markets, sound financial institutions and safe and robust payments infrastructure. The maintenance of financial stability entails the prevention, detection and reduction of threats to the financial system as a whole, through the surveillance of markets and financial institutions, oversight of the payments system and crisis resolution.

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Functions of the Central Bank

In order to achieve its core objectives as well as to discharge its responsibilities as economic advisor and banker to, and agent of the GOSL, the CBSL undertakes the following functions.

Core functionsEconomic and Price Stability Financial System Stability

Ancillary to core functionsCurrency Issue and Management

Agency functions

The Central Bank of Sri Lanka undertakes the following four agency functions for the Government of Sri Lanka.

Employees' Provident Fund Management Foreign Exchange Management Public Debt Management Regional Development

Credit control by the Central Bank

The Central Bank discharges this role by establishing the required legal framework, regulating and supervising key categories of financial institutions, maintaining stability in key financial markets, overseeing the payments and settlements system, acting as lender of last resort and by regular surveillance of the entire financial system, including insurance and stock market activities.

Regulation and Supervision

Regulation and Supervision of Banks

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Regulation and Supervision of Finance Companies Regulation and Monitoring of Finance Leasing Establishments

Regulation and Supervision of Primary Dealers

Monitoring and Surveillance

Maintaining Stability in Money and Foreign Exchange Markets Overseeing the Payment and Settlement System Surveillance of Financial Conglomerates Lender of Last Resort

Financial Instruments owned by the Central Bank

Deposits

Loans

Treasury Bills and Bonds

Repurchase Agreements

Commercial Paper

Corporate Bonds and Debentures

Asset-backed Securities

Financial Leases

Shares

Financial Derivatives

Exchange Rates

In finance, the exchange rates (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency.

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The average rates of the following currencies quoted on that day by commercial banks in Colombo for Telegraphic Transfers (TT) at 9.30 a.m. are as follows.

Daily Exchange Rates 07.07.2010

Currency Buying Rate (Rs.) Selling  Rate (Rs.)Dollar (USA) 112.6700 114.2000

Pound (UK)170.0300

173.4000

Euro (EU) 141.4400 144.6600

Franc (Switzerland) 105.6300 108.1300Dollar (Canada) 106.1500 108.7800

Dollar (Australia) 95.1000 97.6000

Dollar (Singapore) 80.7600 82.4900

Yen (Japan) 1.2819 1.3129

World Trade Organization

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986-1994).The WTO has 153 members, representing more than 97% of total world trade and 30 observers, most seeking membership.

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The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.

Functions of WTO

Among the various functions of the WTO, these are regarded by analysts as the most important:

It oversees the implementation, administration and operation of the covered agreements.

It provides a forum for negotiations and for settling disputes. Additionally, it is the WTO's duty to review and propagate the national trade

policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making.

Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.

The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization

] Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

International Monetary Fund

The International Monetary Fund (IMF) is the international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments.

At present number of registered countries with IMF are 182, operations in 110 countries with 2600 employees.

It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalising economic policies on other countries as a condition for loans, restructuring or aid.

It also offers highly leveraged loans, mainly to poorer countries.

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Its headquarters are in Washington, D.C., United States.

The International Monetary Fund was created in July 1944, originally with 45 members, with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system.

Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances (Condon, 2007). The IMF was important when it was first created because it helped the world stabilize the economic system.

The IMF works to improve the economies of its member countries.

Functions Developing fair and monitor currency exchange rates among all the countries.

MF also provides short tem loans to its member countries so they could bring their imbalanced payment system into balance.

One more important function of IMF is to draw lending money model for borrower countries. In this way IMF also acts as Debtor.

IMF also provides Training and Technical assistance in the areas of finance management system, Tax system, banking system development to its member countries through its Monetary and Exchange Affairs Department, the Fiscal Affairs Department, and the Bureau of Statistics.

The Legal Department, the Bureau of Computing Services, and the area departments also coordinate.

IMF also helps to draw a systematic system for foreign transactions to take place.

It provides advice on microeconomic development.

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References

http://en.wikipedia.org/wiki/List_of_banks_in_Sri_Lankawww.answers.comhttp://buildsrilanka.com/Banks.htmhttp://www.cbsl.gov.lk/htm/english/05_fss/fss.htmlhttp://www.sampath.lk/http://www.business.com/directory/financial_services/banking/banking_institutions/commercial_banks/sri_lanka/weblistings.asphttp://www.hnb.net/http://www.peoplesbank.lk/http://www.cbsl.gov.lk/http://www.mbslbank.com/http://www.ndbbank.com/http://www.nsb.lk/

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