Role of corporate banking in national development

Wednesday, 4 October 2017 00:00 -     - {{hitsCtrl.values.hits}}


  • Sampath Bank on helping augment corporate Sri Lanka’s contribution to the economy

 Banks have been the cornerstone of economic growth and national development for over eight centuries. Their contribution towards the promotion of economic activity within a nation and across borders is unparalleled. There is no other institution more key to the financial growth of a country than a bank as there is no other institution that is able to encourage a culture of savings with the public while simultaneously funnelling those collective savings towards productive channels for the nation’s benefit. Infrastructure, agriculture, energy and telecommunications are among the many sectors that have benefited from the rapid capital infusion provided by banks. Arguably this has helped propel nations forward and allowed them to successfully manage the public’s growing needs.

Today banks continue to hold a position of strategic importance as providers of vital financial services that fuel the economy. Chief amongst these services is corporate banking. Sampath Bank Senior Deputy General Manager Corporate Banking Shashi Kandambi Jassim highlighted the impact corporate banking has had on Sri Lanka. 

“At Sampath Bank we believe that corporations, just like the Government, can make huge positive impacts on the direction a country takes. For this reason we believe it is in our best interest as well as the nation’s to make sure that they are well informed and supported in their endeavours. Just like individual corporations need money to fund various aspects of their business and ensure future growth, at Sampath Bank we provide our corporate clients with an array of services ranging from credit, trade, treasury and corporate finance. However, key amongst our services is the team of specialists we provide each client. These specialists provide our clients with expert knowledge on relevant industries such as construction, agriculture, energy, hospitality and many others. We believe that this service above all else allows our clients to gauge the current and future needs of the country,” she said.

She went on to explain that globally governments too are financed by banks through their investment in government securities and the purchasing of treasury bills. In Sri Lanka Sampath Bank has taken a more active role in this aspect through its participation in Government-led infrastructure projects in the past. 

Energy sector

The bank plans to continue in this role with larger scale investment in future projects with a primary interest in the central express highway and the energy sector.

“The energy sector is a key area of importance for Sri Lanka evidenced by an annual increase in consumption of 4% driven by the domestic and hospitality sectors which has put a strain on the electrical grid which led to the islandwide blackouts we experienced last year. However, it is not simply energy but clean and sustainable energy that interests us. Sampath Bank has the largest investment in renewable energy amongst all the local banks. This is because we also believe that when we invest in a hydropower or solar plant it is not only the sponsors of the project but the community in that area as well that benefits. Their lives change for the better and for us that is invaluable,” said Shashi.

“A lot of people look to us to finance their renewable energy projects because we don’t just provide them with loans but instead enter the project as a partner. We believe this is the best way to ensure the success of the project. We provide them with the necessary consultations such as with the Central Environmental Authority and the Ceylon Electricity Board as well as with engineers. We make sure that every aspect of the project is thoroughly vetted before we commence,” she added.

Innovative collaboration 

and service differentiation

This approach of innovative collaboration and service differentiation is key to Sampath Bank continuing to enjoy a position of leadership in the market. This, coupled with its mandate as a responsible corporate citizen to address the challenges that hinder the progress of the Sri Lankan people by working to help them grow and prosper, makes Sampath Bank a positive force for the growth of the country. 

An example of this is highlighted in the bank’s dealings with manufacturers who primarily produce goods for the export market. These exporters are currently finding it difficult to be competitive in the world market because the cost of manufacturing in Sri Lanka is higher than in neighbouring countries. This puts them at a disadvantage especially when the interest cost of the loan is considered. For this reason Sampath Bank, through its Foreign Currency Banking Unit (FCBU), offered these exporters lower interest rates to help them achieve competitiveness in foreign markets. 

It should be noted that this is not a refinancing scheme nor is it being funded by foreign banks. Instead it is an innovative mechanism put in place by Sampath Bank to help promote exports at a time when Sri Lanka’s exports growth is low and we are being outpaced by other countries in the region.

“We believe that as a national bank we have a duty to support our exporters and we take it very seriously, which is why we have provided them with this special facility. We also support those clients with foreign direct investments by allowing them to do their local banking in Sri Lanka through our branch network and offshore banking unit. Additionally, we have invested in systems and agents in Middle Eastern countries to support Sri Lankan employees in the region. Incidentally, this is the sector generating the highest export revenue for the country,” said Shashi.

In addition to being an intermediary for the transfer of funds, Sampath Bank has also facilitated the transfer of knowledge through seminars and forums with international guest speakers covering many important topics. They do this for their corporate clients to ensure that they as stewards of the country’s development are well informed of the advances taking place in the world and how best they can implement them in Sri Lanka.

These activities of Sampath Bank’s Corporate Banking arm, which contributes 60% to the company’s bottom line, highlight the dominant role corporate banking has come to play in rapid economic development and the promotion of industries that leads to a stronger, stable nation. Since its inception Sampath Bank has viewed the role it plays in the lives of the Sri Lankan people as being paramount to all its other tasks. Today, through its actions, it is actively ensuring that Sri Lanka will have a brighter future and its people have more prosperous lives.