Features
The Bank of Ceylon: what it was, is and can be
Preamble
Arising from the global uncertainties and competitive challenges in socio-economic activities and ‘New-Normal’ life styles, in the aftermath of the ‘Covid-19’ pandemic, we as a group of senior retired bankers who have dedicated 30 to 40 years of their working lives to the glory and success of the largest, indigenous Bank of Sri Lanka with a global presence, consider it timely and appropriate to address the attention of all its stakeholders- viz. the government, valued customers, bank staff, trade unions and the public at large. Towards such end, we wish to deal briefly with the bank’s history highlighting a few of its unique performances and achievements particularly during difficult times, by leveraging on its status as the best internationally rated, local bank in Sri Lanka.
A Brief History of the Bank of Ceylon (BOC)
The Bank of Ceylon (BOC) was established in 1939 as the first indigenous State-aided Bank to assist local entrepreneurs and businessmen who were deprived of much needed finances. While meeting its objectives through financial intermediation, the bank’s deposits and advances portfolios grew exponentially withban expanding Import/export economy; so much so, that BOC opened a Branch in London in 1949. With such signs of fulfilling progress, there was no attempt even after the country’s Independence in 1948 to nationalize the bank.
However, due to a major shift in economic policies, BOC was nationalized in 1961 coupled with protective regulations against foreign banks creating a captive market for state-owned banks. Consequently, the bank in the early seventies was requested to extend its services to the rural areas by opening over 300 islandwide Agricultural Service Centre (ASC) branches under an innovative ‘mixed banking’ model. It surely expanded the bank’s relationship with the populace as its clients. In implementing this model, the bank introduced a plethora of concessionary credit schemes with refinance facilities from the Central Bank and
credit lines from international funding agencies such as the World Bank, Asian Development Bank (ADB) and International Finance Corporation (IFC) to uplift the economy of the rural farmers, small and medium entrepreneurs as well as self-employed artisans in the semi-urban sector.
With the introduction of the ‘open economy’ in the late seventies, Sri Lanka’s financial market was liberalized allowing the re-entry of foreign banks creating a fierce competition especially in commercial and international banking. During the decades of eighties and nineties, the bank responded effectively to the growing challenges in a rapidly changing global environment, by introducing techno- savvy innovative products such as credit cards, ATM/debit cards, in a computerized environment adopting appropriate marketing and human resource development strategies. The bank also expanded its horizons and opened overseas branches in Chennai, Karachi, Male and a joint venture bank in Nepal. With its strong balance sheet and financial performance, the bank was rated high by international rating agencies making it a respected borrower in the international financial markets on behalf of the govt. of Sri Lanka too. BOC was the first local bank that ranked among the top 1,000 banks in the world as per the regular surveys conducted by the reputed UK magazine ‘The Banker’ and it sustains the status quo to date. The recognition of the bank by a strong global network of over 900 correspondent banks continued to facilitate its international banking operations to the immense benefit of the country’s exporters and importers. In summary, the bank’s vision of being ‘The Bankers to the Nation with a global presence’ at the time, was satisfactorily achieved by the aforesaid performances.
It is noteworthy, that in addition to being the banker to the millions of the population in all walks of life, through its Islandwide network of branches, the BOC became the de facto banker to the government as well.
For example, when USA imposed an embargo on Iran in 1980, the BOC drawing on its robust international standing was the only bank to continue to negotiate letters of credit for tea shipments to Iran for its customers uninterruptedly and for other banks’ customers too, relying on assurances by Iran’s “Central Bank”, of payments inclusive of interest for delay, and save the country’s economy while averting a collapse of our tea industry.
On another occasion when ships refused to come to Sri Lanka after LTTE bombed the Colombo harbour, the BOC drawing on its International recognition, arranged a Lloyd’s Insurance guarantee within three working days and paved the way for shipments without disruption and kept the country alive.
In instances as above, BOC was and still is, the only bank operating in Sri Lanka that possesses the will and the ‘risk taking ability’ to act at short notice for the benefit of the country.
BOC’s active involvement as the ‘Bankers to the Nation’ and the govt. during the two insurrections and the tsunami, is no secret to the public and the security forces were relieved by the uninterrupted arrangements made by the bank to collect their salaries without any delays.
With the beginning of the new millennium, the bank’s vision was revised to read as ‘to be the No. 01 Bank in Sri Lanka and to be perceived as such by the general public’. Accordingly, the bank kept step with the rapid changes in technology and introduced customer centric innovative products such as ‘SLIPS’, SMS Banking, Internet Banking and Smart Banking etc.
Successive BOC managements and staff have consistently laboured to maintain BOC’s position as the No. 01 Bank in Sri Lanka. In the process, the bank has now expanded its network up to 2,000 local customer touch points with customers showing a significant shift from physical banking to digital banking instruments such as B-app, Smart Pay, and Online Banking etc. The bank also strengthened its global presence by opening a new branch in Seychelles and a second branch in Hulhumale – Maldives. As a result of the said achievements, the bank won Sri Lanka’s No. 01 Banking Brand and No.01 Bank Awards for the last 12 years in succession.
It is pertinent to mention that, with the blessings and support of the successive governments, the bank when necessary, executed a series of reorganization/re-engineering/restructuring exercises with the assistance of renowned foreign consultancies, to achieve this remarkable progress.
Towards achieving BOC’s Centenary Vision -2039
Presently, BOC is progressing at an intermediate level in regard to its global presence led by its fully owned subsidiary in London and supported by branches in Chennai, Maldives and Seychelles. With its additional representative presence in the Middle East and South/East Asia, the BOC’s Vision-2039 projects a ‘Global Model’ providing a variety of tailored banking solutions to a mature international customer base without compromising its existing commitment towards the upliftment of the unbanked segments of the local society engaged in agriculture, fisheries and allied self-employment activities in the small and medium sectors. Thus, BOC’s Vision -2039 would be a de facto vision for the country too.
The envisaged development of the Colombo Port City as a ‘Regional Financial Hub’ in close proximity to the iconic BOC head office with ‘Heritage’ potential as Jaathi‘ye Maha Pahan Temba’ (The great beacon light of the nation), will provide a visible, majestic stature to BOC as the leading bank like in all other big cities of the world. It will not only stand in good stead with the changing skyline but also will render BOC with the much needed strategic advantage to link its head office with an extension office in the Port City itself, handling off-shore banking activities along with corresponding changes in the local banking landscape. Having heard certain rumours to the effect that BOC’s head office is earmarked for acquisition in connection with the Port City development, we have proposed to the authorities to ensure that the present strategic location of BOC‘s head office be retained in order to fully derive the aforesaid strategic advantages.
The unforeseen global pandemic –‘Covid-19’ forcing an array of ‘New Normal’ practices has in a way, accelerated BOC’s journey towards its centenary Vision-2039, through innovative development of many digital, on-line banking products to meet both local and global demands. Conversely, the global pandemic has affected our country rating as well as that of the bank due to obvious reasons. Against this backdrop, BOC will be hard pressed to face the challenge of sustaining robust ratings by the International rating agencies while maintaining its pre-eminent position as the No.01 Bank in Sri Lanka.
In this context, it behoves the govt. to provide the necessary environment and the impetus to allay any negative impact on the bank’s commitments to the local and foreign clientele especially our long standing and reputed network of foreign correspondents and boost BOC’s reputation as the only Sri Lankan bank that can mobilize international assistance in emergencies.
A Proposal
Towards this end, in addition to Central Bank guidelines, we have proposed that a fresh ‘Agreement’ be entered into between the Govt. and the BOC, inter-alia permitting the requisite autonomy to the bank to conduct its business like any other private commercial bank conforming to prudential banking norms (BASLE Accord) and other international norms that bear upon its ratings by renowned International rating agencies. Such action will surely buttress BOC’s stride towards its centenary Vision-2039 and ensure achievement of govt.’s own goal of a prosperous Sri Lanka.
We are confident that the internal stake holders of the Bank such as the staff and trade unions would be quite alive to our submissions.
“In a global financial market, the key financial ratings, supported by the stature and image of a bank are equally critical as its ownership.”
A group of retired members of the Corporate and Executive Management of BOC.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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