Mobile-based micro lending to drive Sri Lanka’s banking sector growth

22 September 2015 03:22 am - 0 - {{hitsCtrl.values.hits}}

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With the very high mobile penetration and mobile banking platforms being developed in the country, mobile-based micro lending is poised to become one of the primary growth drivers in the banking sector in Sri Lanka, according to an independent research company.

According to Capital Alliance (CAL) research, high mobile penetration in Sri Lanka will act as an enabler in channelling loans into the bottom of the pyramid segments in society.

“CAL identifies microfinance as an attractive opportunity present in the market, given Sri Lanka’s microfinance penetration ratio of only 10 percent,” CAL said in a banking sector research note.

It was only last week Central Bank Payments and Settlement Department Director Mala Dayaratne emphasized the regulator is committed in promoting mobile banking, particularly to reach the un-banked segments.

Among Sri Lanka’s licensed commercial banks, only Hatton National Bank PLC has a sizable share in the micro lending segment as their exposure to microfinance is 3 percent of their loan book.

The national payment infrastructure provider, Lanka Clear (Pvt.) Limited, has already developed its Common Mobile Payment Switch (CMoPS), which will facilitate person-to-person, low value payments through mobile phone and is ready for implementation.

“The switch is live but we are awaiting the bank side solutions to be plugged in to the CMoPS. We have already given them (banks) our specifications,” said Lanka Clear CEO Sunimal Weerasooriya.

However, Weerasooriya said that there will be a value cap as to how much one could pay using his mobile.

Further, the mobile banking and the mobile-based payment platforms will further benefit the bank’s bottom line as the banks will require less capital expenditure on physical infrastructure going forward in reaching markets and expanding their footprint.

CAL further forecasts the banking sector loan book to grow by 16 percent in 2015 predominantly driven by the retail and SME segments. “SME disbursements have been on the rise over the past few years, growing 23 percent year-on-year in 2014.

Further, supporting loan book growth in the sector is the leasing and hire purchase disbursements, which grew 23 percent year to date. This was driven by an average 18 percent increase in household income expected in 2015E and the appreciation of the LKR against major international currencies in 1H2015,” CAL added.

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Mobile-based micro lending to drive Sri Lanka’s banking sector growth

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