Business
Resilient banks, nervous markets
‘Market participants appear to be focusing more on underlying vulnerabilities’
Sri Lanka’s banking system continues to show resilience despite mounting domestic and global economic pressures, but developments across financial markets tell a more cautious story, with foreign investors retreating, market volatility rising, and the rupee remaining under pressure despite a major IMF-related inflow.
According to the Central Bank’s latest Financial Sector Performance report, banks and finance companies entered 2026 with strong credit growth, healthy capital buffers, and improving asset quality. Yet the same report points to growing strains in equity, bond, and foreign exchange markets, suggesting investors remain unconvinced that the country’s recovery is firmly on track.
The contrast between financial institutions and financial markets has become increasingly pronounced.
Licensed banks expanded credit by 24.4% year-on-year during the first quarter, while finance companies recorded even stronger growth of 52.4%. Despite this, foreign investors continued to reduce exposure to Sri Lankan assets. Net foreign outflows from the Colombo Stock Exchange reached US$103.4 million during the first five months of the year, extending a trend that has persisted since 2024.
Reflecting this caution, the All Share Price Index fell 1.4% by end-May, while the benchmark S&P SL20 Index managed only a marginal gain of 0.03%. The Central Bank attributed the subdued performance to heightened sensitivity to global risk sentiment, rising domestic inflation expectations, and external shocks, including geopolitical tensions in the Middle East.
An independent analyst told The Island Financial Review that despite Sri Lanka receiving a fresh US$695 million IMF disbursement in late May, the rupee has continued to face volatility and depreciation pressures.
“Market participants appear to be focusing less on short-term inflows and more on underlying vulnerabilities, including a widening trade deficit, higher energy import costs, geopolitical uncertainties, and concerns about the sustainability of external sector gains,” he said.
The analyst noted that the Central Bank itself acknowledged continued volatility in the foreign exchange market amid increasing external pressures. Meanwhile, government securities have also come under strain, with yields rising from March and increasing further after the Central Bank raised policy interest rates in May.
“Such developments indicate that markets are demanding higher returns to compensate for perceived risks, even as macroeconomic indicators show signs of improvement,” he said.
The contrast is particularly striking when viewed against the banking sector’s performance. Non-performing loans continued to decline, with the Stage 3 loan ratio falling to 9.4% from 12.7% a year earlier. Liquidity and capital levels remain comfortably above regulatory requirements, while lending activity has strengthened, pushing the credit-to-deposit ratio above 70% for the first time in three years.
However, the analyst argued that risks may now be migrating elsewhere within the financial system and broader economy. He pointed to the credit-to-GDP gap moving further into positive territory, a development often viewed as an early warning signal of excessive credit expansion and future vulnerabilities. The Central Bank has already tightened lending standards for vehicle financing and gold-backed loans, two segments that have recorded rapid growth.
“While banks remain profitable and well-capitalised, market signals suggest investors are increasingly focused on inflation risks, exchange-rate instability, geopolitical tensions, and the prospect of tighter financial conditions. The banks appear comfortable. Investors, however, are not yet fully convinced,” he said.
By Sanath Nanayakkare
Business
Sri Lanka’s first generative AI‑powered, trilingual insurance assistant
Sri Lanka Insurance Corporation General Limited (SLICGL) unveiled Beechat, the country’s first generative AI‑powered insurance assistant, heralding a milestone for Sri Lanka’s insurance industry and move towards digital services.
Beechat is designed to transform the customer experience. Available through the SLICGL website (https://www.slicgeneral.com/) and customer portal, the Assistant offers customers instant access to policy information, real-time claim status updates, and insurance-related help 24 hours a day, seven days a week.
For customers, Beechat makes insurance simpler and always available. Instead of waiting in queues, calling hotlines, or being limited to business hours, customers can check policies, track claims, and receive instant answers in Sinhala, Tamil, or English, empowering every customer, whatever their language, to manage their insurance with ease.
The inclusivity ensures every customer, regardless of language preference, can engage with insurance services seamlessly. The AI‑driven platform reduces complexity, eliminates delays, and builds trust. Ultimately, Beechat transforms insurance from a process often seen as slow and complicated into a smooth digital journey that fits modern lifestyles.
The launch of SLICGL Beechat is strategically important for the organization because it strengthens its position as a leader in innovation within Sri Lanka’s insurance industry. Introducing the country’s first generative AI‑powered, trilingual insurance assistant, SLICGL demonstrates a commitment to digital transformation and technology‑driven service excellence.
The initiative reaffirms the company as forward‑thinking and customer‑centric and differentiating from competitors who still rely on traditional service models. It signals to industry stakeholders that SLICGL is setting new standards for accessibility, efficiency, and convenience in insurance.
Pioneering AI‑driven customer engagement, the company sets a new benchmark. Beechat demonstrates how technology can elevate insurance from a traditional service into a dynamic, futuristic experience, strengthening SLICGL’s relationship with the people it services. (SLICGL)
Business
‘Lanka Tractors returns with a historic Colombo 11 showroom’
Lanka Tractors Limited officially reopened its original showroom in Colombo 11, marking the return of one of Sri Lanka’s most recognised agricultural machinery companies and the official launch of the ACE Tractor brand in the country.
Located at 343 Olcott Mawatha, Colombo 11, the showroom was ceremonially declared open by Chief Guest Dudley Sirisena, Chairman of the Araliya Group of Companies, in the presence of Upul Jayasuriya, Chairman of Lanka Tractors Limited, Thilina Abeysuriya, Managing Director, Nishantha Yapa, Head of Business, and Rajiv Gunawardena, CEO of Asia Asset Finance PLC.
Originally established in 1971 as the State Trading (Tractor) Corporation, Lanka Tractors was restructured in 1991 and became one of Sri Lanka’s largest importers and distributors of agricultural machinery. Over the decades, the company represented internationally renowned brands including Massey Ferguson, Kubota and TAFE, earning the trust of generations of Sri Lankan farmers through quality products, technical expertise and dependable after-sales support. The reopening of its original Colombo 11 showroom, first established in 1982, marks the revival of an institution that has played a pivotal role in the mechanisation of Sri Lankan agriculture for more than five decades.
The company’s revival commenced in late 2025 through an exclusive partnership with ACE Tractors, the agricultural division of Action Construction Equipment (ACE) Limited, one of India’s leading engineering and manufacturing companies. ACE manufactures tractors, agricultural machinery, construction equipment and industrial equipment, with annual production capacity exceeding 9,000 tractors, exports to more than 37 countries, and a dealer and service network spanning over 100 locations worldwide.
Prior to the commercial launch, Lanka Tractors adopted an extensive validation programme to ensure the products were ideally suited to Sri Lankan farming conditions. Three introductory models—the ACE VEER 3000 (26 HP 4WD), ACE DI 350 NG (40 HP 2WD) and ACE DI 450 NG (45 HP 4WD)—underwent rigorous field testing across multiple agricultural regions under the supervision of ACE technical specialists. Following several product refinements based on local operating conditions, the tractors were introduced to the market in April 2026.
Business
Akurugraphy exhibition opens at Geoffrey Bawa Space in Colombo
The desire to communicate and be understood is at the heart of what it is to be human. In contemporary life, digital infrastructure underpins how we work, live, and share information, but the letterforms that carry our languages are rarely neutral.
Arkurugraphy, a new exhibition at the Geoffrey Bawa Space, explores the history, culture, and future of letterforms across Sri Lanka’s three official languages. Presenting the decade-long practice of Colombo-based type foundry Mooniak, it examines how decisions about the digitisation of Sinhala, Tamil, and Latin scripts impact legibility and carry deep consequences for who is seen, who is heard, and whose language endures.
Writing systems carry human thought and knowledge across time and space. Letterforms can become a form of cultural artefact, unique graphic symbols representing identity and belonging. Today, these inherited letterforms often take shape as digital fonts, their design demanding fluency across history, aesthetics, linguistics, and technical standards. Akurugraphy asks audiences to look at letterforms beyond the act of reading: to appreciate their form, trace their past, and consider the decisions that impact their future.
Akurugraphy brings together typographic specimens, archival material, and software development spanning Mooniak’s full body of practice. It is a celebration of letterforms as art and an examination of the technical and political stakes of designing scripts for the digital age. As part of the exhibition, the Geoffrey Bawa Space will host a programme of monthly talks, curatorial tours, workshops, and children’s programmes.
Akurugraphy is open Wednesday through Sunday, 10:30 a.m. – 5:30 p.m., and will be on view until 8 November 2026. The exhibition is designed to be accessible and welcoming to all visitors. The Geoffrey Bawa Space offers step-free access and wheelchair accessible facilities. Tactile elements are available throughout the exhibition. More information is available at geoffreybawa.com/akurugraphy .
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