Corporates must look beyond banks: SEC Chief

Prof. Hareendra Dissabandara

The capital market regulator, the Securities and Exchange Commission (SEC), is positioning equity and debt markets to play a larger role in financing economic growth, noting that the corporates will increasingly need to look beyond the traditional bank borrowing as the regulatory changes tighten the lending concentration limits and funding needs expand.

SEC Chairman Senior Professor Hareendra Dissabandara said efforts are underway to deepen the capital market and broaden the financing avenues for businesses at a time when the economy is emerging from crisis and transitioning towards a more sustainable growth path.

“One of the key drivers for this initiative is the introduction of Single Borrower Limits by the Central Bank of Sri Lanka, effective January 1, 2026, which is expected to constrain the traditional bank financing for large corporates and create a greater need for market-based funding solutions,” Prof. Dissabandara said.

He shared his views in the Securities and Exchange Commission’s (SEC) 2025 annual report released this month. 

Prof. Dissabandara noted that the SEC had engaged extensively with corporates and market participants during the year to promote listings and expand the use of capital market instruments as alternative sources of financing.  He said the regulator viewed a deeper and more diversified capital market as essential to supporting Sri Lanka’s long-term economic ambitions, particularly as businesses seek larger pools of capital to finance expansion, innovation and productivity improvements.

Alongside the efforts to encourage private sector participation, the SEC has also begun laying the groundwork for state-owned enterprises (SOEs) to access market-based financing, signalling what could become a significant shift in the way the public sector entities raise capital.

According to Prof. Dissabandara, the SEC worked closely with the Colombo Stock Exchange, Trade Ministry and Registrar of Companies Department during the year, to facilitate reforms aimed at enabling greater participation by the state entities in capital markets.

“Recognising the potential role of SOEs in capital market development, the SEC collaborated with the CSE, Trade Ministry and Registrar of Companies Department to support initiatives aimed at facilitating SOE access to market-based financing,” he said.

While no specific listing plans have yet been announced, any future move by the SOEs towards raising funds through equity or debt markets could significantly expand the size and depth of Sri Lanka’s capital market while easing pressure on public finances.