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Re-engineering IT to enable growth and plan new products

National Savings Bank is a premier licensed specialized bank in Sri Lanka owned by the government of Sri Lanka. It is the only bank whose deposits are fully guaranteed by the government.The bank came into being by amalgamating 4 savings institutions. One of these was Ceylon Savings Bank that commenced mobilization of savings in Sri Lanka in 1832, just 2 decades after a Scottish parish minister Dr Henry Duncan started the world’s first savings movement in 1810 in Scotland. Ever since, the bank has won the trust of the people and come a long way to lead the country’s rupee savings market with a market share of 11.5%. The only local bank to receive AAA Fitch ratings for 12th consecutive year, NSB has covered the whole island with its network.

“We have 18.5 million customer accounts while the active customer baseis 10 million,” says S.D.N. Perera, general manager/CEO of the bank. “This cusomer bases increase by new accounts of 350,000 a year,’ he adds.

The bank has a network of 242 branches and 260 ATMs. There were 3710 employees at the end of June 2015. “Over and above these branches and ATMs, 4063 post offices in the country act as an agents of the bank for providing banking services,” says Perera.


The top 3 sectors to which the bank lends are retail, SOEs (state owned enterprises) and corporate. It leads the housing loans market with its incredibly low interest rates and speedy service. “Deposit mobilization (net increase) (up to June FY 2015) is Sri Lankar Rs 21,453 million, which is 3.7% yoy growth, while the loans disbursed (net increase) during the same period is Rs 15,086 million, which is 6.7% yoy growth,” says Perera.

Being a state-owned bank has some disadvantages. For example, says Perera, providing financial facilities to exporters and importers do not come under the business scope of the bank. “We have been granted limited approvals by the Central Bank of Sri Lanka towards funding the government of Sri Lanka and state-owned enterprises with short term and long term funds very recently,” says he.


The bank entered the inward remittances business in 2005 and over the period of 9 years it has made a significant progress, competing with other banks, which have been operating in this sector for decades. Non-resident Sri Lankans are connected with the bank through leading money transfer services such as MoneyGram, Xpress Money, Instant Cash, TransFast LLC, UniStream, Eurogiro and Exchange Houses. Says Parera: “Inward remittances through the bank have been increasing over the years and the total remittances received by the bank for the year 2014 were Rs 35,415 million compared to Rs 6,933 million in 2009. The inward remittance market share of the bank has increased to 4.4% by the end of March 2015 from below 2% in 2010.”


With a view to completely reengineer the IT systems, the bank has prepared an IT strategic plan to be implemented in the next 3 years. “We have already commenced the initial ground work for moving into a new CBS replacing an in-house developed system. In addition, projects are also under way to upgrade ATM solution, procure credit rating and scoring system, treasury system, AML system and e-remittances system,” says Perera.


The bank has maintained the NPL ratio below the industry average during the past. However, because of the gold price crisis, the NPA of pawning advances (gold backed loans) increased significantly during the latter part of 2013 and in 2014. “Our total NPAs remain at the same level of Rs 16 billion by the end of June 2015 compared to NPAs recorded by the end of the year 2014 as a result of the significant efforts of the bank on loan recovery and strategies used to reduce the pawning NPAs. The total gross NPL ratio of the bank has been reduced to 7.2% by end of June 2015 from 7.8% that was recorded at the end of 2014,” reveals Perera.


Following the global financial crisis, the Central Bank of Sri Lanka has introduced several regulations and reporting requirements covering risk management, liquidity management and compliance. According to Perera, the trickle down impact of the global financial crisis in Sri Lankan banking industry was minimal or negligible since the exposure to the international investments by the local banks were minimal. However, there was a financial scam in one of the subsidiaries of a local bank, but swift action of the part of both the government and the Central Bank of Sri Lanka avoided a possible banking crisis in the country.


NSB will focus on retail, corporate and project lending to expand business operations and business growth, says Perera. Special attention is paid for development of infrastructure facilities of the bank and reengineering of business process and IT system and moving into new areas of operations such as foreign exchange trading and trade finance, he adds.

“The main business goals of the bank for 2016 are increased retail, corporate and project lending portfolio to over Rs 440 billion, foreign currency deposits to increase over Rs 35 billion, ROA of 1.73% and total CAR of 15%,” he adds.

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