CSE discontinues with
Officials say it’s a security precaution, trading will not be
The Board of Directors of the Colombo Stock Exchange (CSE) at
its last meeting held on March 17 decided to discontinue the age
old practice of having a trading floor with effect from April 1
as a security precaution.
The Chairman of the Colombo Stock Exchange Nihal Fonseka said
that it was a well considered decision taken after much
discussion. He said that, “The paramount consideration was
security which cannot be compromised,” while they also
considered other factors such as the small number of people
using the floor.
However, he said that depending on the security situation, if
the CSE board feels it necessary, they are ready to reconsider
the decision at the correct time.
A senior CSE official said that it will not have any impact on
trading as only about 4 % of trading is done on the floor. He
pointed out that on any given day, less than 100 people visit
the floor and that with the current Automated Trading System (ATS)
all trading can be done from the offices of the stock broking
The CSE’s Manager Business Development, Tushara Jayaratne said
that the decision has been taken in view of the current security
situation in the country, as it is difficult to keep a tab on
various people entering the World Trade Center in Colombo, where
the CSE trading floor is currently located.
The CSE currently has 20 stock broking firms but only nine of
them have their presence on the CSE floor. “It is more or less a
meeting point for some of the brokers and a few investors,
mostly those involved in speculative trading,” a senior broker
The CSE also operates 4 regional offices in Matara, Kandy,
Kurunegala and Negombo.
He further said that many stock exchanges in the world have now
stopped the practice of having physical trading floors although
some exchanges like the New York Stock Exchange still continue
to have trading floors mostly for historic reasons.
He pointed out that with the introduction of the new system of
trading and abolition of the open out cry system, the
traditional trading floor had become a mere public gallery and
its discontinuance will have no impact on the market activities.
The CSE was one of the first exchanges in the region to
successfully automate its activities in 1991, with the
installation of a Central Depository and an electronic clearing
and settlement system for share transactions, and an Automated
Trading System (ATS) in 1997.
The CSE provides companies the opportunity of raising equity and
debt capital required for their expansion from the primary
market. It also provides a mechanism for price discovery in an
active secondary market. The equity and debt securities of a
public company can be listed on either the Main or Second Board
of the CSE; a Main Board for larger companies and a Second Board
for medium to small companies and for start up companies
central banks collaborate on payment and settlement system
Central Bank of Sri Lanka inaugurated the SAARC Payments
Initiative (SPI) on Friday (28) at the John Exter International
The SPI is a regional initiative to facilitate and co-ordinate a
regional forum for the national payment and settlement systems
(PSS) of member countries.
It is anticipated that through the SPI, the Central Banks of
SAARC countries will work collectively to develop effective
institutional arrangements to enhance payment system mechanisms
between the countries.
Such a mechanism will assist in the promotion of trade and
investment in the region.
The SPI will also provide regional central banks with the
opportunity to upgrade their payment systems to international
standards, and thereby enable them to become partners in the
global payment system community.
The SAARC Payments Council (SPC), which also held its first
meeting on Friday, will take the lead role in providing
direction for reforming PSS in the region.
Improving the safety and efficiency of PSS are high on the
National, regional, and international experts in the field of
PSS will provide advice to the council.
The idea of establishing an SPI was first floated at a SAARC
conference held in Sri Lanka last July.
Several months later, Sri Lanka’s Central Bank was asked to lead
the process and has now established a secretariat for the SPI.
ceiling on finance company interest rates
The Monetary Board of the Central Bank of Sri Lanka has issued a
new direction titled ‘The Finance Companies (Interest) Direction
No. 1 of 2008’ to the registered finance companies, lowering the
maximum interest rate that can be paid on term deposits by 0.5
percent and 1 percent based on the term to maturity of term
deposits, and by 1 percent in respect of savings deposits. This
new direction will come into force from April 1, the bank said
in a news release.
As per the new direction, the maximum annual rate of interest
which may be paid by a finance company on a time deposit which
carries a maturity period of 12 months or less shall not exceed
the weighted average yield applicable to 364-day Treasury Bills
issued during the immediately preceding quarter, plus 2.5
For the deposits which carry a maturity period of more than 12
months, the interest rate may not be more than 5 percentage
points over the weighted average yield applicable to 364-day
Treasury Bills issued during the immediately preceding quarter.
The previous limits were 3 and 6 percentage points,
respectively, above the relevant Treasury Bills yields.
The interest rate that can be paid on savings deposits has also
been changed. The maximum annual rate of interest on any savings
deposit should not exceed the weighted average yield applicable
to 91-day Treasury Bills issued during the immediately preceding
quarter, less 1 percentage point. Prior to the new direction,
the maximum rate was the weighted average yield applicable to
91-day Treasury Bills issued during the immediately preceding
The deposit interest rate ceilings imposed under the new
direction are shown in the table.
All registered finance companies are required to comply with the
direction. The relevant weighted average yields applicable to
Treasury Bills are sent to all registered finance companies by
the Department of Supervision of Non-Bank Financial Institutions
of the Central Bank of Sri Lanka at the end of each quarter to
enable the finance companies to adjust the interest rates as
required by the direction.
The Central Bank expects that these revisions of the deposit
interest rate ceilings would, in turn, lead to the reduction of
the lending rates of finance companies.
Deposit Category Interest Rate Ceiling (% per
Time deposits, bond or other instruments WAY on 364-day TB +
maturing in 12 months or less
Time deposits, bond or other instruments WAY on 364-day TB + 5%
maturing in more than 12 months
Savings deposits WAY on 91-day TB – 1%
SLSB to pay 12000
depositors money will not be used for the payments
By Indika Sakalasooriya
Around twelve thousand depositors of the failed Pramuka Savings
and Development Bank are to be reimbursed starting from June 3
subject to a maximum of Rs.100, 000, Chairman of the newly
formed Sri Lanka Savings Bank (SLSB) Ariyatilake Dahanayake told
The Nation Economist.
The Central Bank of Sri Lanka recently formed SLSB primarily to
settle all the transactions performed by the defunct Pramuka
Bank, by transferring the Pramuka assets worth of over Rs.800
million to SLSB.
“We have already sent letters to the deposit holders of Pramuka
Bank to address their woes. There are about 14000 deposit
holders who should be paid back. But as a start we will be
paying only 12000 of them” Dahanayake said.
According to him the full amount will be paid for deposit
holders who had less than Rs.100, 000 in their accounts.
“But for the people who had above Rs.100,000 we will be able to
pay only Rs.100,000 even though they had millions in their
However, according to Dahanayake, moneys of the SLSB’s
depositors would be utilised to repay Pramuka depositors.
He also said that the Treasury has promised the SLSB a sum of
Rs.1.5 billion and they have already received Rs.200 million.
“All the money we are getting from the Treasury will be used to
strengthen the financial structure of the bank,” he explained.
However during the latter part of last year it was reported that
there had been 15,495 Pramuka depositors out of whom 3,500 had
accounts amounting to less than Rs. 100,000. State institutions
too had deposited around Rs. 350 million in the bank.
SriLankan Airlines Chairman & Directors
The Government has appointed a new chairman and directors to
SriLankan Airlines, with immediate effect.
Dr P B Jayasundera has been appointed Chairman with Nishantha
Wickremasinghe, Lalith De Silva and Sunil Wijesinha as Nominee
Directors to represent the government which holds 51.05% shares
while the Emirates Airline holding 43.63% shares will be
represented by Tim Clark, Gary Chapman and Nigel Hopkins.
Lion-Carlsberg joint venture in India kicks off as scheduled
By Indika Sakalasooriya
The Lion Brewery’s joint venture with Carlsberg Breweries of
Denmark in Rajasthan, India to set up a Greenfield brewery will
come into operation as planned, Suresh Shah Ceylon Brewery PLC’s
Director/CEO told The Nation Economist.
“The plant will come up as planned in 2008 and what we have said
back in 2006 is still valid,” Shah remarked.
However, he said that he was not in a position at present to
divulge further details about the plant since it was a joint
venture with Carlsberg and mainly handled by Carlsberg.
He also said that the intense competition and the growth
potential for the beer market in India were significant factors,
due to which he would not disclose more details about the plant.
Lion Brewery entered into a joint venture partnership with
Carlsberg Breweries of Denmark in 2006 to set up a Greenfield
brewery in Rajasthan in India.
Lion Brewery owns 22.5% in the venture whilst Carlsberg
Breweries holds 45%. IFU (Industrialisation Fund for developing
countries) Denmark holds 10% and the others hold the remaining
22.5% of the equity.
The brewery will have a capacity of 450,000 hl and is scheduled
to come into operation in the first quarter, affirmed the
According to industry analysts, there is a significant potential
for growth in the Indian beer market. India is among the lowest
in Asia on the annual beer consumption rate per person, at only
0.7 litres per year, with an annual GDP growth rate at more than