The 0.02% debt repayment levy on all financial transactions introduced in the 2018 Budget will see banking sector profits impacted by Rs. 20 billion unless it is passed on to the customers.
The new levy, enforced as a temporary measure for three years, will rake in Rs. 20 billion, the second largest revenue to the Government under the 2018 Budget.
“However, if the banks truly absorb this cost without passing it on to the customers, it will bring the profitability of the banking sector collectively down by Rs. 20 billion at a time they are required to implement Basel III capital rules by early 2019 and increase minimum core capital from the current Rs.10 billion to Rs.20 billion by 31 December 2020,” said Colombo Stock Brokers Association President Ravi Abeysuriya.