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Kathiravelupillai on how the APB came to be, the banking industry’s growth and challenges


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  • Following is an interview with Association of Professional Bankers – Sri Lanka Founder Member, Past President and Advisor A. Kathiravelupillai, conducted by APB Council Member K. Raveendran and APB Senior Vice President Aruna Fernando

 

Q: At the outset, could you please tell us when you started your banking career and what influenced you to select banking as your profession?

 I started my banking career on 20 August 1954 by joining Bank of Ceylon. I did not have any special preference for choosing a profession but I wanted a job where I could enhance my career prospects by my contribution using

A. Kathiravelupillai

my skills and knowledge. I am happy I chose banking as my profession as it gave me opportunities to develop my professional skills and help young bankers to develop their banking skills and knowledge by conducting lectures, training programs and seminars organised by professional and banking institutions, and guiding them as founder member and past president of Foreign Exchange Association of Sri Lanka, Trade Finance Association of Bankers, Local Centre of the Chartered Institute of Bankers – London (CIB) and Association of Professional Bankers – Sri Lanka (APB).

 

Q: The banking industry in the post-independent era has faced various challenges in terms of setting up industry standards, developing skills, creating professional and career development opportunities, etc. Could you please share your early career challenges?

 Just after independence, Bank of Ceylon was the only indigenous bank and banking was confined to Bank of Ceylon and few foreign banks until the formation of People’s Bank in July 1962. Banking was dominated by Bank of Ceylon and People’s Bank, accounting for about 75-80% of the banking business. Foreign banks were not allowed to expand their business and banking was conducted under a restrictive environment. With the liberalisation of economy in 1977, foreign banks were invited to open branches in Sri Lanka and their entry though considered as a threat and challenge to local banks, local banks used this opportunity successfully to enhance their services to international standards. 

Banking was not regulated and only directives were issued in the form of operative instructions by the Central Bank of Sri Lanka until the passage of the Banking Act No. 30 of 1988. There were no facilities for bankers for training and enhance their knowledge and skills. The only available opportunity for bankers was to sit for the Diploma examination conducted by the Chartered Institute of Bankers – London (presently known as The London Institute of Banking and Finance, incorporated by Royal Charter) to get professional qualifications. There were no institution or professional body to conduct classes for the exams, bankers had to rely mainly on correspondent courses from Metropolitan Institute, Rapid Results, etc. from London. Bankers were compelled to develop their skills and professionalism on their own initiative as there were no institutions providing such facilities. 

This shortcoming was somewhat overcome overcame when Central Bank of Sri Lanka formed the Bankers Training Institute in 1964 which was later incorporated as Institute of Bankers of Sri Lanka (IBSL) in 1979 by an Act of Parliament. IBSL was empowered to conduct banking diploma examinations and issue certificates in addition to conducting classes for the benefit of bankers, for which IBSL established the College of Banking and Finance. This was followed by several programs to improve banking standards. As for me, I was fortunate to work in the London branch of Bank of Ceylon in the early ’60s. I had the opportunity to attend some programs conducted by the Chartered Institute of Bankers London and short-term training programs in Barclays and Midland Bank which were the bank’s main correspondent banks.

 

Q: You were also a member of the group that enthusiastically worked to form the Association of Professional Bankers – Sri Lanka (APB) in 1988. Please tell us about your colleagues and how all of you manage to form the association, as a team?

 The idea to form an association for bankers to meet and discuss their common problems, exchange ideas, update their skills and knowledge germinated in the ’70s. The general consensus at that time was to form a local centre of the Chartered Institute of Bankers – London, similar to the local centres in Hong Kong, Singapore, Malta, etc. After prolonged discussions and correspondence, the Secretary General of Chartered Institute of Bankers – London gave approval for forming the local centre on our providing with a no objection certificate from the IBSL and application signed by more than 50 members of CIB.

At the meeting convened by late P. Letchumanan of Commercial Bank of Ceylon to arrange for the formation of the local centre, it was pointed out by Rienzie Wijetilleke, the Managing Director of Hatton National Bank, that formation of the local centre of CIB would benefit only its members and the bankers qualifying from IBSL would not benefit. Hence, it was decided to form an association so that bankers qualifying from both CIB and IBSL could become members. That is how the APB was formed in addition to the local centre of the CIB. 

Although the association was formed in March 1988 it took time to finalise other formalities including drafting of the Constitution, admission of members, election of office bearers, etc., and the official inauguration of the APB was conducted on 26 March 1990 at the Hilton Colombo in the presence of the Chief Guest D.B. Wijetunge, Prime Minister and Finance Minister, Dr. H.N.S Karunatilleke, Governor of the Central Bank of Sri Lanka, founder President of APB Rienzie Wijetilleke and a number of senior bankers.

Key members who worked hard to form the association were Rienzie Wijetilleke (Managing Director, Hatton National Bank), late P. Letchumanan (Commercial Bank of Ceylon), late Patrick De Silva (Bank of Ceylon), late K. Sivagananathan (Bank of Ceylon), late A.L. Abeygoonawardena (Bank of Ceylon), M. Machado (Hatton National Bank), Ernest Gunasekera (Bankers Trust) and Ranjith Fernando (National Development Bank).

 

Q: What was the need to form the APB in 1988 and what were its key founding objectives?

 The need to form the APB was to provide a forum for bankers to meet and discuss common problems, exchange ideas, update the skills and knowledge of the bankers.

The primary objectives of APB include the following:

Undertake, promote and facilitate studies in the field of banking and allied subjects, organise and promote research in this field

Plan and organise teaching and arrange training programmes in the field of banking and allied subjects

Train students and others in research methodology with idea of promoting knowledge and awareness in subjects relevant to banking

Promote fellowship and understanding among members of the association

Promote and safeguard the common interests of the profession

Provide a forum for discussion of matters of professional and academic interest to bankers

The APB’s mission includes the following:

To sustain the highest standard of professionalism and integrity among bankers

To advance public interest 

To influence achievement of the highest ethical standards and governance in the banking industry\

 

Q: Who were the founder members of the APB and what were the key challenges faced in forming the association?

 In addition to the key members mentioned earlier, the following constitute the founder members: M.R. Abeytunge, N.B.S.B. Balalle, Yoga Gopalakrishnan, T.R. Peiris, T. Thiagarajah and late E.T. Fernando.

We did not face any challenges in the formation of APB but had a few problems initially in conducting the affairs of the association.

Since the office bearers of the association were very busy executives they could not devote much time for the activities of the association

No permanent place to house the APB office. We had to conduct the meetings at the offices of the President or Secretary General

Limited finance for the expansion of the activities of the association 

The membership fee and the profit from public-seminars were the only source of income. We did not approach the banks for sponsorships or contributions.

 

Q: You immensely contributed to the progress of the APB with your fellow members. How do you see the progress of the APB over past 30 years?

 The progress has been extremely good. Active members of the association at present exceed 1,500. The council meetings are held once a month in addition to any special meetings. Several sub committees were formed to carry out the objectives of the association. A Panel of Advisors has been appointed to advise the council. The Fund Management Committee meets regularly to manage the development fund. Bank coordinators are being appointed to assist the council. The Professional Banker, the Journal of the APB, is being published quarterly. Social activities such as members’ get-togethers are being continued annually. Annual convention and the publication of the Convention Volume are being continued. Lecture programs and seminars are being conducted regularly. To provide better service to members, a greater degree of automation was carried out at the APB Secretariat. The enthusiasm and cooperation shown by the membership are very encouraging.

 

Q: In your view, what are the key achievements of APB?

 The key achievements of APB are as follows:

Conducting the first-ever banking symposium on completion of a decade of service to the banking industry for three days from 10-12 July 1998, on the subject ‘Banking beyond Year 2000’. 

The main attraction was the keynote speech by the Guest of Honour Andrew Buxton, Group Chairman of the prestigious Barclays Bank, London. This was followed by the Banking Symposium in 1999 on the subject ‘Excellence in Banking’; the keynote speaker was Sir Brian Pitman, Chairman of Lloyds Bank, London; the 12th year symposium was held in year 2000 on the subject ‘Towards a Safer Banking System’; the keynote speaker was Rt. Hon. Sir Edward George, Governor Bank of England. Attracting such eminent, internationally-reputed bankers to deliver the keynote address was a great achievement and recognition for APB. The credit for arranging the three eminent speakers goes to late K. Sivagananathan.

Another achievement was the publication of the first convention volume on the subject ‘The Way Forward – Bankers Perspective,’ containing articles by eminent bankers and industry professionals. This volume released on the 10th year banking symposium was edited by D.L. Kannangara, former Deputy Governor Central Bank of Sri Lanka.

Conducting of the Annual Convention every year on a subject of topical interest to bankers addressed by eminent professionals from Sri Lanka and abroad and the publication of the convention volume.

Recognising a banker or a professional in the allied fields for making valuable contribution to the banking industry at the annual convention with the award ‘Outstanding Contribution to the Banking Industry’.

Steps taken to incorporate APB as a legal entity by an Act of Parliament. Although it reached the final stages of being included in the Parliament’s Order Paper, it had to be postponed due to the prorogation of Parliament. 

 

Q: What challenges do you foresee and how do you think the bankers should respond to them? 

 Many operational challenges can be predicted for local banks, as a result of the changing landscape of the global financial industry. A few, most obvious ones could be highlighted. 

The FinTech disruption of the financial services industry is a good example. The digitisation of the financial industry had helped the banks to resolve problems and grow, but at the same time has also created new problems in the process. One-time small tech-savvy startups or small FinTech companies have now matured into challenging competitors to banks, for the customer share as well as the business they bring to the banks. It might be more prudent to partner with FinTech companies than opposing them, as there are many operational areas that banks could collaborate with them successfully in the future. The majority of the global financial service leaders too agree with this view.

Cyber-security issues in the financial services industry is another great challenge for banks. The financial sector is the most targeted area by swindlers and hackers for the most obvious reasons. Internationally, it has been reported that data breaches relating to financial service companies have increased by nearly five folds since 2017, with each attack costing the companies millions of dollars. Innovative solutions such as ‘block chain technology’ are necessary to avoid such cyber-crimes in the banking sector. 

Implementing and compliance to the Sri Lanka Accounting Standard 9 (SLFRS9) since January 2018, I see as a future challenge to the banks. Complying with the above new Accounting Standard, there is a shift in the provisioning models of banks from ‘incurred credit loss model’ to ‘expected credit loss model’. This will affect the banks’ Non-Performing Loan (NPL) ratios, provisioning amounts, Net Profit Ratio, Return On Assets (ROI), etc., exposing banks to great challenges in the future. However, banks have to comply with the above new accounting standard, no choice. Hence, it would be prudent for banks to create and maintain a quality loan book in the banks. Complying with BASEL III requirements and the implementation of the Debt Repayment Levy will further dampen the earnings of the banks.

Further, according to industry experts, Artificial Intelligence (AI) will make a huge impact in the financial services industry in the future. AI will transform many key aspects of banks. For example, automated wealth management, customer verification, open banking, etc. will create opportunities for AI solution providers, challenging the traditional banking channels. The main future challenge for banks would be how to use the power of AI for the benefit of their survival and growth. Banks should engage in more Research and Development activities, to find innovative solutions to use AI to their benefit in the future.

In addition to the above key operational challenges, the customer retention and employee retention in the financial services industry would become a major challenge in the future. Further, slow economic growth and political instability in the country at present would affect the growth and profitability of banks in the future. This would invariably have a negative impact on the national economy in the future.

 

Q: APB has been playing a vital role in providing the membership the platform to exchange views, make deliberations, develop their professional skills, share their opinion with regard to profession and the industry in view of the national interest, etc. In your opinion, what further support can the APB extend to its membership in the context of facing challenges?

 In terms of further support the APB could extend to its membership in the context of facing challenges: 

One of the primary objectives of the association was to undertake and facilitate studies in the field of banking and organise and promote research. Very little has been achieved in this area. APB should endeavour to carryout research in banking field by forming research team of professionals. Money for this purpose can be obtained from the development fund.

There is dearth of banking books and journals, the association should arrange to publish books on banking and allied areas authored by professional writers.

Expedite the incorporation of APB as a legal entity by an Act of Parliament. 

Take the activities of the association to outstations for the benefit of the outstation bankers.

 

Q: What is your key message to the membership of APB?

 To be a successful banker in addition to your professional qualifications, you have to be proactive, customer-focused, and update knowledge and skills regularly. All these need commitment, dedication and hard work.

 

 


FT Profile: A. Kathiravelupillai

 

A. Kathiravelupillai is a senior Fellow of the Chartered Institute of Bankers, London and a former Deputy General Manager of the Bank of Ceylon. He served Bank of Ceylon in various responsible positions since the early 1960s up to his retirement. Kathiravelupillai is a veteran senior banker in the Sri Lankan banking industry, who has contributed immensely to the development of the local banking industry and knowledge/skill building of the banking community in Sri Lanka. Kathiravelupillai was instrumental in initiating discussions and forming the Association of Professional Bankers – Sri Lanka (APB), in July 1988, and serves as an active founder member of the APB to date. In recognition of the services rendered to the banking industry in general and the APB in particular, he was bestowed with the ‘APB – Outstanding Contribution to the Banking Industry’ award in 2006. He was the very first recipient of this prestigious award at the APB Annual Convention in 2006. Further, Kathiravelupillai has been awarded the ‘Honorary Life Membership of the Association of Professional Bankers – Sri Lanka,’ in recognition of his invaluable services and commitment to the APB over the past three decades of its history. Kathiravelupillai is a former President (year 1991/1992), and currently serves as an Advisory Council member of the Association of Professional Bankers – Sri Lanka.

 


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