Despite an increase in users shifting to cashless transactions, Sri Lanka banks are facing a shortage of new ATM cards as its suppliers cannot import plastic resin cards owing to the present dollar crisis at present, several General Managers of banks disclosed.

Some of the local banks have suspended the issuance of new credit and debit cards or renewal of the ATM cards on expiry, pushing account holders into difficulty since a couple of months ago.  

Under this circumstance, these account holders had to vist banks for their financial transactions, spending their valuable time in bank counters.

State owned banks are facing more shortages compared to commercial banks. There is also a shortage of SIM cards powered by chips. The chips are mainly imported from China. 

It is learned that several branches of banks have started to run out of stock .There are also several complaints lodged against those suppliers, who have increased the price for cards supplied to banks by taking advantage of the current situation.

Driven by significant chip shortages, hundreds of payment cards are at risk of not being issued over several months,a senior banker said.   

It has been well documented that the entire semiconductor industry is currently going through a high level of uncertainty as demand for chips continues to far exceed all expectations across all industry segments. 

Supply cannot currently keep up with increasing demand and the payment cards industry is by no means immune from this situation.

Local banks have raised concerns on the usage of debit and credit cards for foreign currency transactions due to the current volatility in the market, and have started taking on their own a set of measures to minimise the hit on the sector.

Sri Lanka Bank’s Association (SLBA) said that individual banks have taken necessary measures to limit foreign currency transactions via debit and credit cards.

“No common decision has been made but there were concerns raised with regard to debit and credit card transactions overseas.

 This was due to the recovery process and billing issues among other areas of concern,” said a SLBA high official. 
He pointed out that banks are concerned with the usage of debit and credit cards for overseas transactions largely due to two reasons.

The first is the issue with electronic fund transfer facilitator Visa. As it pays the rates as per rates published by the Central Bank of Sri Lanka (CBSL), the difference in rates that prevailed in the market some time ago created an issue for banks.

Now it is back to normal but earlier when Visa settles to the bank with the CBSL published rate, we had to settle at a different rate from the customers which was creating a problem for us,” he explained.

The second is that due to import restrictions, banks are watchful and want to ensure that the cards are not used for unacceptable foreign currency transactions.

Furthermore, he stated that a collective decision on settling limits would depend on the value and volume of foreign currency transactions happening through the cards.

“Cyber threats and other factors are also being considered at the moment but it depends on the extent of the transaction,” he added.

He asserted that although banks are exercising caution, no limitations would be imposed on transactions made by education, hospital, airline, insurance, and hotel merchants.

He also pointed out that as several media reports highlighted that banks were charging an additional fee for foreign currency transactions, banks have held active discussions in that regard and are exploring avenues to best manage the situation.

The Asian Development Bank (ADB) President Masatsugu Asakawa arrived yesterday in Sri Lanka and reaffirmed the multilateral organisation’s support for a quicker socio-economic recovery amidst challenges.

Asakawa called on President Gotabaya Rajapaksa yesterday and during the meeting reaffirmed ADB’s support for Sri Lanka’s recovery path from the coronavirus disease (COVID-19) pandemic.   

Asakawa commended the Government’s rapid vaccination drive, which has been critical to managing the spread of COVID-19 and kick-starting economic activities amid social, fiscal, and debt challenges.

“Sri Lanka is managing a number of complex challenges raised during the COVID-19 pandemic, including through necessary efforts to restore fiscal and external balances while containing inflation,” Asakawa said. 

“ADB is committed to supporting the Government in addressing the present challenges and striding toward green, resilient, and inclusive growth as well as sustainable energy transition.”

Asakawa is on a two-day visit to Sri Lanka, his first visit to South Asia since assuming office in January 2020.

 In meetings with Prime Minister Mahinda Rajapaksa and Finance Minister and Chair of the ADB Board of Governors Basil Rajapaksa, Asakawa highlighted the need to underpin sound macroeconomic management with structural reforms. ADB is preparing a new country partnership strategy for Sri Lanka to support its National Policy Framework and medium-term development targets.

Together with ADB Director General for South Asia Kenichi Yokoyama and ADB Secretary Muhammad Ehsan Khan, Asakawa reviewed preparations for the 55th Annual Meeting of the ADB Board of Governors to be hosted by Sri Lanka in September with the theme of “Positioning Climate Resilient Green Economy for the Post COVID-19 World”.

During his visit, Asakawa will inaugurate Sri Lanka’s first microgrid system and the associated research and development lab at the University of Moratuwa. 

The system can operate in both grid-tied and off-grid modes. The pilot, financed under the ADB-assisted Supporting Electricity Supply Reliability Improvement Project, has the potential to be replicated and contribute to a green and climate resilient future.

He is scheduled to visit the Colombo Port and the Port Access Elevated Highway Project, which provides a direct link to the port from the expressway network. Colombo Port received support from ADB to improve container handling capacity and is now one of South Asia’s few deep-water ports strategically linking the key Asia–Europe shipping route. 

Asakawa will also visit the ADB-supported molecular polymerase chain reaction (PCR) laboratory at the Colombo East Base Hospital. The laboratory – the largest in the country – was established in 2020 to support Sri Lanka in its response against the COVID-19 pandemic.

ADB is a long-standing partner of Sri Lanka, which is a founding member of the institution. Since its first loan to Sri Lanka in 1968 to help modernise tea factories, ADB has funded projects in a variety of sectors such as agriculture, rural development, water, transport, and energy. 

ADB has provided cumulative assistance of $11.3 billion, including both sovereign and non-sovereign projects and programs. ADB’s Trade and Supply Chain Finance Program (TSCFP) has supported transactions valued at $ 6.9 billion, of which $ 1.26 billion was for essential goods imports in 2021 including vaccines and other medical and pharmaceutical products.

During the pandemic, ADB provided $ 150 million to support the country’s vaccination drive, and additional loan and grant funds to procure medical supplies and materials to increase the screening and testing capacity across the country, expand intensive care services, and upgrade emergency treatment units and inpatient hospital wards. TSCFP also supported import of vaccines totalling $ 160 million. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members – 49 from the region.