By: Staff Writer

February 08, Colombo (LNW): The Central Bank of Sri Lanka has relaxed restrictions on the usage of the Standing Facilities by the Licensed Commercial Banks (LCBs) under the Open Market Operations (OMOs), introduced with effect from 16 January 2023.

In January 2023, the CBSL imposed limits on banks’ access to its overnight lending and deposit facilities (Standing Lending Facility and Standing Deposit Facility) to encourage them to rely more on the interbank call money market.

This move aimed to revitalize the money market and reduce banks’ overdependence on the central bank.

The CBSL reports that the initial restrictions achieved their intended goals, reactivating the money market and moderating competition for deposits among banks.

The measures also helped align market interest rates with the central bank’s monetary policy stance while maintaining financial system stability.

Following a review of market developments and improved liquidity conditions, the CBSL has decided to ease the borrowing limits. Effective February 16th, 2024:

Accordingly, access to the Standing Deposit Facility (SDF) was limited to a maximum of five (05) times per calendar month, while access to the Standing Lending Facility (SLF) was limited to 90 per cent of the Statutory Reserve Requirement (SRR) of each LCB, at any given day, Central Bank announced.  

These measures were imposed with the intention of reducing the overdependence of LCBs on the overnight facilities offered by the Central Bank, supporting the reactivation of the domestic money market, particularly the call money market, and inducing LCBs to introduce internal corrective measures.

The Central Bank observes that these measures have yielded positive outcomes by way of reactivating the domestic money market and curtailing excessive competition for deposit mobilisation among financial institutions.

These measures were also instrumental in inducing a moderation in the market interest rate structure in line with the monetary policy stance, while preserving stability of financial institutions and the financial system.

After carefully reviewing the developments in the domestic money market, as well as the behaviour of LCBs in terms of market participation along with the improvements in liquidity, the Monetary Policy Board, at its meeting held on 07 February 2024, decided to relax the restrictions imposed on the Standing

Facilities to LCBs under OMOs. Accordingly, with effect from the reserve maintenance period commencing 16 February 2024, the restriction on the SLF will be removed and the restriction on SDF will be relaxed from five times (05) to ten times (10) during a calendar month.

The relaxation of the restrictions on the Standing Facilities is expected to accelerate the downward adjustments in market interest rates as envisaged under the overall monetary policy direction of the Central Bank.

By: Staff Writer

February 08, Colombo (LNW): Canwill Group ventures include a 47-story hotel project consisting of 458 rooms and 100 serviced apartments built to Grand Hyatt specks in Colombo 3 and construction of a luxury beach resort on 9.42 acres of beachfront land in the southern city of Hambantota.

Six companies mostly from India have been pre-qualified to submit Request for Proposal to acquire Canwill Holdings Ltd., which is developing a 47-story hotel project consisting of 458 rooms and 100 serviced apartments built to Grand Hyatt specks in Colombo 3.

The five Indian companies are RKG Fund 1-Scheme of RKG Trust, Gland Celsus Bio Chemicals Ltd., DB Realty Ltd., Jindal Films India Ltd., and Bright Star Investments Ltd. The sole Sri Lankan bidder is consortium Consulting Engineers and Contractors Ltd., and K.D.A. Weerasinghe and Company.

The short-listing follows the Expression of Interests which closed on 12 December last year. The SOE Restructuring Unit (SRU) said the EOIs received were evaluated in accordance with the terms and conditions set out in the Request for Expressions of Interest in compliance with the Special Guidelines on Divestiture of SOEs approved by the Cabinet of Ministers in July last year.

The short-listing was done by the Cabinet Appointed Special Project Committee and the Special Cabinet Appointed Negotiating Committee.Deloitte India is the transaction advisor for the divestiture of Government’s stake in Canwill Holdings.

Canwill was incorporated in December 2011 to invest in the Hospitality/Tourism sector. Its principal activities include investment promotion in the leisure sector and controlling and monitoring subsidiaries as a holding company.

The Government intends to divest all or part of equity shareholding in Canwill Holdings the parent company to Sinolanka Hotels & Spa Ltd. (Sinolanka) and Helanco Hotels & Spa Ltd. (Helanco).

Helanco holds 9.42 acres of beachfront land in the southern city of Hambantota for construction of a luxury beach resort.

The proposed transaction will include sale of shares of both these subsidiaries. However, if interests are received for subsidiaries separately, the Government reserves the right to carry further process accordingly.

The Sinolanka Hotels and Spa’s hotel and serviced apartment project’s structure and façade of the building is almost complete with substantial capex done.

Most of the approvals and planning for completion is in place as per global standards. With most of the time-consuming activities already completed, the hotel can be commissioned in a quick time frame.

The Project is notified as a ‘Strategic Development Project’ eligible for various tax concessions during the project implementation period as well as during commercial operations.

Helanco entered into a hotel management agreement with Hyatt International-Southwest Asia Ltd (Hyatt) on 27 March 2014, to operate the property as Hyatt Regency. It was envisaged to be a luxury beach resort. However, construction is yet to commence. The agreement between Hyatt and Helanco has since expired and is no longer valid. 

By: Staff Writer

February 08, Colombo (LNW): The operating environment for the Sri Lankan finance and leasing company (FLC) industry is expected to continue to stabilise, following the inflation and interest rate shocks over the past two years, Fitch Ratings said yesterday.

It noted that the easing inflation and interest rate pressures should provide steadier conditions for the FLC sector performance.

“Some headwinds linger, as higher taxes will continue to weigh on household finances in 2024. Investor confidence will also take time to recover. Nonetheless, we expect the economic activity to improve in FY25 as GDP growth recovers,” the rating agency said.

Fitch shared its take on the local FLC sector in the rating action commentary of Asia Asset Finance, a 72.9 percent-owned subsidiary of India-based Muthoot Finance Ltd (MFL, BB/Stable).

Fitch ratings gave the entity a first-time rating of ‘A+(lka)’, with a stable outlook.Its core business is in gold-backed lending, similar to its parent. Asia Asset Finance has a small market share of 1.6 percent of the total FLC industry assets.

Fitch Ratings said Asia Asset Finance’s rating reflects its expectation that MFL would provide extraordinary support to its subsidiary, if required.

The agency said it believes MFL has the financial ability and incentive to provide support, given its majority shareholding, record of capital infusions and strategic and operational alignment in its subsidiary’s core product – gold-backed loans.

“This is counterbalanced by Asia Asset Finance’s small size and contribution to MFL, limited brand sharing and different operating jurisdiction,” it said.

Asia Asset Finance’s business model aligns with MFL’s core product of gold-backed loans, following its transition from vehicle financing and unsecured loans. MFL has a clear influence on Asia Asset Finance’s business strategy and maintains oversight of execution at the board level.

The shareholder also appoints three non-executive directors on Asia Asset Finance’s eight-member board and has seconded an employee to head its gold-loan internal audit team. Nonetheless, some differences remain due to the entities’ separate jurisdictions and local market practices.

Adequate Ordinary Capital Support: MFL has provided adequate and timely capital support to Asia Asset Finance since it acquired the company in 2014.

 It infused around LKR400 million in 2019 to support the subsidiary’s business growth. A further LKR413 million was infused in 2021 to meet the increased minimum regulatory capital requirement of LKR2.5 billion for Sri Lankan FLCs, ahead of the stipulated compliance deadline.

By: Staff Writer

February 08, Colombo (LNW): Socomec India, part of France based leading global specialist in Low Voltage (LV) power management, yesterday unveiled its ambitious expansion plan.

The Chennai headquartered French powerhouse is set to venture into the markets of Sri Lanka, effective immediately.

Termed as ‘Greater India,’ this strategic move consolidates into a unified business entity, marking a significant milestone for Socomec India and opening up new opportunities for business growth.

Socomec India Regional Managing Director Meenu Singhal said: “Our commitment to meeting the evolving energy needs with innovative power solutions in the Asian market remains unwavering.

Engineered in Europe and proudly manufactured in India, our products are poised to make a substantial impact in the markets of Sri Lanka and Bangladesh.

This expansion solidifies our dedication to the ‘Make in India’ initiative, with India serving as a pivotal hub for Socomec’s strategic growth in the Asia Pacific region.

Our adherence to global quality standards positions us to navigate this journey with ease. We look forward to building lasting partnerships and empowering businesses with sustainable and efficient power solutions, further strengthening Socomec’s position as a trusted leader in the industry.”

With a recent Euro 5 million investment by Socomec Group in the Indian market to enhance manufacturing capacity, the goal is not only to meet local demands but also to cater to exports to Sri Lanka and Bangladesh.

Socomec India is energising the country through its innovative power solutions, including uninterrupted power supply, power switching, and monitoring solutions.

 Leveraging cutting-edge technology, these products are tailored for data centres, manufacturing and process industries, healthcare, infrastructure, commercial buildings, and renewable energy.

With a focus on local presence, these product categories will now be available in the Sri Lanka and Bangladesh markets. With this expansion, Socomec India aims to double its revenue in these regions within the next three years.

To fortify this ambitious growth plan, Socomec announced the appointment of Suhard Amit as the General Manager, tasked with steering the company’s initiatives in the emerging markets of Sri Lanka and Bangladesh.

Amit, with a distinguished career spanning over 25 years in diversified market segments, brings a wealth of expertise to the role, positioning him as a key driver of Socomec’s strategic endeavours in these dynamic markets.

As Socomec India embarks on this exciting journey of expansion, the company remains dedicated to delivering excellence and innovation in power management.

The commitment to sustainable solutions and superior quality will not only benefit businesses in Sri Lanka and Bangladesh, but also contribute to the overall development of these regions.

 This move contributes to the broader South Asian Association for Regional Cooperation (SAARC) initiative, promoting economic cooperation and regional integration. The ‘Greater India’ vision positions Socomec as a catalyst for cross-border trade and cooperation within the SAARC nations.