Naleen Edirisinghe, Director and Chief Executive of Pan Asia Bank, says that the economic crisis, which unfolded after the 2019 Easter bombings, compounded by the Covid-19 pandemic and a debt and currency crisis, stems from a complex web of interconnected economic missteps that have developed over a significant period.
“However, the worst is now behind us,” Edirisinghe says. In this interview, he provides insights into Pan Asia Bank’s strategy to promote entrepreneurship in Sri Lanka, enhance inclusivity, fulfil environmental, social, and governance (ESG) responsibilities, and contribute to economic recovery and sustainable growth.
How is Pan Asia Bank poised to unlock opportunities in an environment such as you just explained?
The recent Western Province Entrepreneur of the Year Awards highlighted a significant concern: Sri Lanka’s entrepreneurship rate stands at a mere 5%, in stark contrast to Japan’s 30%. This stark difference underscores the pivotal role entrepreneurs play in driving a country’s economic development. At Pan Asia Bank, our foremost objective is to fortify the business banking sector, catering to both corporate entities and SMEs.
We believe that by strengthening the business segments of the banking sector, we can foster overall economic improvement, positively impacting the lives and standards of individuals, including ordinary citizens.
Recognizing the diverse needs of businesses, we prioritize customized solutions. A one-size-fits-all approach falls short, whether a business operates a tire shop or engages in trading. As banking professionals, we engage directly with businesses, deploying a dedicated team to visit, discuss challenges, assess needs, and conduct on-site evaluations.
Our commitment extends beyond the Western Province. With 85 branches, including 47 in rural areas, Pan Asia Bank diligently channels funds from the Western Province to rural areas, contributing to the nation’s growth and entrepreneurial landscape.
Embracing technology is integral to our efforts, particularly in enhancing payment and financial transaction systems. Furthermore, we recognize that access to low-cost funding is vital for business sustainability. To address this, we’ve initiated multiple refinance schemes in collaboration with organizations like the Asian Development Bank, the Ministry of Finance, and the Central Bank. These initiatives enable us to provide funding for diverse projects, all aligning with our core banking focus.
Apart from the financing requirements, how else is the Pan Asia Bank assisting enterprises?
Our holistic approach includes mentoring and support beyond financial assistance, recognizing that SMEs require tailored guidance to thrive and overcome the multifaceted challenges they encounter.
During the challenging times of the COVID-19 pandemic, we took proactive steps to provide valuable guidance to our SME clients. In particular, we recognized the importance of addressing the employee-related issues they encountered during the pandemic. To tackle this, we brought in a specialist in industrial relations to impart knowledge on effective staff management and staff retention strategies.
Furthermore, our dedicated SME officers have received specialized training, ensuring that they are well-equipped to understand and address the distinct challenges faced by SMEs around capital, knowledge, technology, and reliance on a single entity for business continuity.
Can you give us a sense of your digital banking strategy and how it fits with the values and objectives of Pan Asia Bank?
Digital banking plays a pivotal role in enhancing the overall customer experience. This encompasses services like internet banking, ATM banking, and Cash Deposit Machines (CDMs). We’ve made significant progress in digital banking, achieving a milestone of 50,000 digital banking customers, with a predominant contribution from our rural branches. This achievement underscores our unwavering commitment to delivering convenient and efficient digital banking solutions to our customers.
Digital banking extends beyond customer-facing services; it also encompasses operational efficiency achieved through digitization. This entails rapid onboarding processes, streamlined transfers, and efficient loan origination systems. The seamless integration of customer-centric digital services and operational efficiency results in customers enjoying the full spectrum of benefits that digital banking offers, including efficiency, speed, and high-quality service.
Environmental, social, and governance (ESG) factors are instrumental in ensuring the long-term sustainability of our bank and informing our lending policy. For instance, in the environmental sphere, our funding of drip irrigation ventures contributes not only to our business but also to environmental conservation by minimizing water wastage. Governance, another crucial facet of ESG, ensures discipline in our lending practices. This discipline, in turn, fosters sustainable growth, benefiting both the economy and our bank.
What is your vision for the bank’s future?
For our country to thrive, banks must invest in nurturing entrepreneurs. Without this support, our nation’s turnaround will remain elusive. Therefore, at Pan Asia Bank, our primary focus and allocation of resources for the next three years will be dedicated to strengthening our presence in the business banking segment, encompassing enterprises of all sizes.
By fostering entrepreneurship in our country, we aim to stimulate economic growth. This growth, in turn, will benefit everyone, including everyday consumers.
We believe that encouraging individuals to take entrepreneurial risks is pivotal in this endeavour. While we acknowledge the inherent risks associated with SMEs, such as reliance on a single person, limited capital, and potential technology gaps, we are prepared to mitigate these risks by allocating approximately 25% to 30% of our resources for SME lending. This prudent approach will allow us to balance risk by lending to corporates and other low-risk entities. Ultimately, we understand that despite the challenges, this particular segment holds the potential for significant growth. As responsible bankers, we are committed to supporting entrepreneurs and taking calculated risks to drive the growth of our business banking segment in a way that would contribute to placing Sri Lanka on a trajectory for sustainable growth.