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Lending rates are basically decided by customers: BOC GM/ CEO

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Russel Fonseka, General Manager/CEO of Bank of Ceylon

By Sanath Nanayakkare

Veteran banker Russel Fonseka who is the General Manager/ CEO of Bank of Ceylon said last Thursday that it is basically the customer who decides the lending interest rate according to the profitability and financial viability of their business operations.

He said so in response to a question posed by The Island Financial Review at a press conference where the BOC announced a new SME loan quantum of Rs. 5 billion for small and medium enterprises (SMEs) and startups.

“The Central Bank’s independence in making its monetary policy is a positive thing for the financial market as well as our customers because the Central Bank will be making those decisions according to market conditions. At the end of the day, interest rates are decided by the market. Even BOC’s lending rates are basically decided by our customers. If they are not okay with the interest rates we offer when they compare with their sales targets, profitability and other financial aspects of their operations, they will make their own decision. In most of the cases, our lending rate is decided by the customer. Our customer is the person who gives the interest rate. They would say, ‘this is the interest rate we can afford to pay. If you can offer it, we will take it, or otherwise, we will go to other banks. So, our task is to see whether we can match the customer’s requirement and do business with them, “he explained.

“BOC has the largest deposit base, so we have the ability to offer better lending rates. Further, as the Central Bank has decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of Licensed Commercial Banks (LCBs) by 200 basis points, from 4.00 per cent to 2.00 per cent, that will accrue great improvement in BOC’s liquidity levels as well,” he pointed out.

When asked by how much exactly the favorable SRR would raise BOC’s liquidity levels, he replied,” We are getting a significant amount because of the reduction in SRR,” without disclosing an exact number.

Responding to how BOC could offer Rs. 5 billion worth SME loans 5% below current market rates, he said,” Although we offer the new SME loan scheme loans at 12.0 for applicants with collateral and at 12.5% for applicants with no collateral, our funding cost is a little bit higher. But when we compare this Rs. 5 billion loan quantum with BOC’s total exposure in lending which is about Rs. 2,300 billion, this Rs. 5 billion is nothing for BOC. That is why we are in a position to offer this Rs. 5 billion quite comfortably to support the recovery and growth of SMEs.”

Referring to non-performing loans (NPLs), BOC GM said,” Because of the economic conditions, our NPLs at 6%, is a little bit high, but the key thing here is we haven’t written off any loan facilities given in the past 10- 15 years.”

When asked about the Domestic Debt Optimization (DDO) and, repayment of Sri Lanka Development Bonds in LKR, a senior official of BOC said,” We have been given different options. We have carefully analyzed the operational environment. We have made the required provisioning and there won’t any impact on our performance as a result of the DDO. We will be releasing our 2Q financial report this week. The challenges from NPLs are abating now as our customers are having improved cash flows, so we can maintain our asset quality position which you will see in our 2Q financial report.”

BOC is analyzing which treatment of debt exchange would best suit the Bank and the Bank’s senior management and the Board of Directors would decide on which option to take. The Bank affirmed this important decision would be an internal decision.



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HNB Finance bags 2 CMA Reporting Awards 2025

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Prof. Ho Yew Kee presents the award, while Rajeeva Bandaranaike hands over the certificate to the HNB Finance team. Featured (right to left): Thushara Jayasekara – Chief Manager / Head of Corporate Planning & Analytics; Randula Munindradasa – Assistant Manager Planning & Analytics; Sandakelum Jayathunga – Senior Manager – Financial Reporting; Maheshika Samarakoon – Manager – Strategy Implementation & Reporting

HNB Finance PLC has been honoured with two prestigious accolades at the CMA Excellence in Integrated Reporting Awards 2025, reaffirming the company’s commitment to transparency, good governance, and integrated business performance.

At this year’s ceremony, HNB Finance PLC was awarded Second Runner Up – joint in the category of “Best Integrated Report , Finance and Leasing Sector”, and also received a Merit Award in recognition of its continued efforts to enhance reporting quality and strengthen stakeholder communication.

The CMA Excellence in Integrated Reporting Awards, organised annually by the Institute of Certified Management Accountants (CMA) of Sri Lanka, acknowledge organisations that demonstrate superior financial reporting standards aligned with global best practices. Winners are assessed on key criteria such as financial performance and strategic management, corporate governance and compliance, innovation and digital transformation, sustainability practices, and professional excellence.

Chaminda Prabhath, Managing Director/CEO of HNB Finance PLC, commented on the recognition, “These awards reaffirm our commitment to upholding the highest standards of integrated reporting and transparent financial disclosure. At HNB Finance, we remain focused on delivering sustainable long-term value through robust governance frameworks, prudent financial management, and continuous innovation. The acknowledgement by CMA Sri Lanka reflects the disciplined efforts of our teams across the organization and motivates us to further enhance our reporting quality, strengthen ESG integration, and reinforce our stakeholder centric approach.”

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ComBank joins ‘Liya Shakthi’ scheme to further empower women-led enterprises

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Mithila Shyamini, Assistant General Manager – Personal Banking at Commercial Bank and Jude Fernando, Chief Executive Officer of the National Credit Guarantee Institution exchange the agreement in the presence of representatives of the two organisations

The Commercial Bank of Ceylon has reaffirmed its long-standing commitment to advancing women’s empowerment and financial inclusion, by partnering with the National Credit Guarantee Institution Limited (NCGIL) as a Participating Shareholder Institution (PSI) in the newly introduced ‘Liya Shakthi’ credit guarantee scheme, designed to support women-led enterprises across Sri Lanka.

The operational launch of the scheme was marked by the handover of the first loan registration at Commercial Bank’s Head Office recently, symbolising a key step in broadening access to finance for women entrepreneurs.

Representing Commercial Bank at the event were Mithila Shyamini, Assistant General Manager – Personal Banking, Malika De Silva, Senior Manager – Development Credit Department, and Chathura Dilshan, Executive Officer of the Department. The National Credit Guarantee Institution was represented by Jude Fernando, Chief Executive Officer, and Eranjana Chandradasa, Manager-Guarantee Administration.

‘Liya Shakthi’ is a credit guarantee product introduced by the NCGIL to facilitate greater access to financing for women-led Micro, Small, and Medium Enterprises (MSMEs) that possess viable business models and sound repayment capacity but lack adequate collateral to secure traditional bank loans. Through NCGIL’s credit guarantee mechanism, Commercial Bank will be able to extend credit to a wider segment of women entrepreneurs, furthering its mission to drive inclusive economic growth.

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Prima Group Sri Lanka supports national flood relief efforts with over Rs. 300 Mn in dry rations

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Defence Secretary Air Vice Marshal (Retd) Sampath Thuyacontha receiving the donation from Sajith Gunaratne - General Manager of Ceylon Agro Industries Limited, and Sanjeeva Perera - General Manager of Ceylon Grain Elevators PLC

Prima Group Sri Lanka has pledged assistance valued at over Rs. 300 million, providing essential Prima food products to support communities affected by the recent floods across the island. This relief initiative is being coordinated through the Ministry of Defence to ensure the timely and effective distribution of aid to impacted families.

As part of this commitment, Prima Group Sri Lanka donated a significant stock of Prima dry rations to the Government of Sri Lanka on 30 November. The consignment will be distributed across multiple severely impacted districts. These supplies will support families facing disruptions to daily life, ensuring they receive assistance as recovery efforts continue.

The handover took place at the Ministry, where the donation was received by the Secretary of Defence, Air Vice Marshal (Retired) Sampath Thuyacontha. Representing Prima Group Sri Lanka, Sajith Gunaratne – General Manager of Ceylon Agro Industries Limited, and Sanjeeva Perera – General Manager of Ceylon Grain Elevators PLC, officially presented the donation.

Prima Group has been standing with the people of Sri Lanka for over 40 years, and this donation reflects its broader commitment to the nation during challenging times. As relief operations continue across the island, the company remains focused on helping families rebuild their lives and supporting the ongoing recovery process in collaboration with the Government Authorities.

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