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Sri Lanka central bank to develop a cost-based rate to price loans EmptyToday at 12:10 pm by puliyanam

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyYesterday at 3:53 pm by Backstage

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Sri Lanka central bank to develop a cost-based rate to price loans EmptySun Feb 23, 2020 8:41 pm by Backstage

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyFri Feb 21, 2020 8:53 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 20, 2020 6:47 pm by NIRMALSG

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 20, 2020 12:45 pm by Backstage

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 20, 2020 9:57 am by nuwanmja

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Feb 19, 2020 1:04 pm by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Feb 19, 2020 9:46 am by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyMon Feb 17, 2020 12:40 pm by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyMon Feb 17, 2020 11:07 am by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptySun Feb 16, 2020 9:24 pm by Backstage

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 13, 2020 1:50 pm by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Feb 12, 2020 11:47 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Feb 12, 2020 6:19 pm by NIRMALSG

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 06, 2020 8:33 pm by nihal123

» VPEL.N0000 (Vallibel Power Erathna PLC)
Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 06, 2020 11:29 am by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 06, 2020 10:47 am by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Feb 06, 2020 10:37 am by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Feb 05, 2020 11:15 am by nihal123

» 2013 දී ශ්‍රී ලංකන් ගුවන් සේවයේ ඉහළ නිලධාරී බිරිඳකට ඩොලර් මිලියන 2ක අල්ලසක්
Sri Lanka central bank to develop a cost-based rate to price loans EmptyTue Feb 04, 2020 12:53 pm by කිත්සිරි ද සිල්වා

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyMon Feb 03, 2020 11:16 pm by nihal123

» චීනයේ හුනාන් පළාතේ තවත් වයිරසයක් පැතිරයන බවට අනතුරු ඇඟවීමක්
Sri Lanka central bank to develop a cost-based rate to price loans EmptyMon Feb 03, 2020 9:15 pm by serene

» ද ෆිනෑන්ස්, අර්ථසාධක අරමුදලේ රු. මිලියන 205 ක් ගිලියි
Sri Lanka central bank to develop a cost-based rate to price loans EmptyMon Feb 03, 2020 12:29 pm by nihal123

» COMB.N0000 (Commercial Bank of Ceylon PLC)
Sri Lanka central bank to develop a cost-based rate to price loans EmptySat Feb 01, 2020 6:16 am by serene

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyFri Jan 31, 2020 8:08 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 30, 2020 10:13 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 30, 2020 6:57 pm by Backstage

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 30, 2020 9:35 am by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Jan 29, 2020 10:33 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyTue Jan 28, 2020 2:39 pm by lanka

» LIOC.N0000 (Lanka IOC PLC)
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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 09, 2020 9:59 pm by nihal123

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 09, 2020 5:40 pm by subash

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyThu Jan 09, 2020 10:42 am by The Invisible

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Sri Lanka central bank to develop a cost-based rate to price loans EmptyWed Jan 08, 2020 10:48 pm by The Invisible

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Sri Lanka central bank to develop a cost-based rate to price loans

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Sri Lanka central bank to develop a cost-based rate to price loans Empty Sri Lanka central bank to develop a cost-based rate to price loans

Post by The Invisible on Wed Jan 08, 2020 10:21 pm



ECONOMYNEXT – Sri Lanka’s central bank said it was developing a cost based benchmark interest rate to price loans, hoping unusually that it will improve competition.

“Establishing a sound benchmark interest rate for the banking sector, which reflects actual cost of funds, has become vital given the deficiencies of the existing benchmark interest rates,” the central bank said in a roadmap for monetary policy in 2020.

“The Central Bank intends to set up a task force with the participation of relevant stakeholders to introduce an appropriate cost reflective benchmark interest rate for pricing loan products.

“We believe that this measure will improve healthy competition among banks, while supporting efficient transmission of monetary policy measures.”

It is not clear how cost-based pricing will improve competition as the key drawback of cost-based pricing is that it ignores that there is competition as rookie business studies students learn.

With competition eliminated, the regulator then has to set targets to bring costs of various components down as is done in telecom, power cost based pricing.

Costs can differ widely from bank to bank, based on how inefficient, or overstaffed each bank is. Any cost based pricing would eliminate the need to cut costs due to competition, a key problem with formula based pricing.

There have already been complaints that high costs of state banks, which command large shares of deposit and loan markets is a reason for high nominal rates.

Sri Lanka has high and volatile interest rates, a phenomenon common in countries with monetary instability and currency depreciation.

Sri Lanka’s central bank last year killed competition in deposit markets by forcing banks to artificially bring down rates on the threat of punitive action after destroying the real value of customer deposits through currency depreciation.



See Also


Sri Lanka rupee ends weaker, gilt yields fell



Slow Sri Lankan regulations delay Dialog Finance's fintech innovations



Sri Lanka stocks plunge 2-pct, dives below 6,000



Sri Lanka President orders quick construction permits



Avirate fashion of Sri Lanka to continue global expansions in tie-up with Expolanka

Analysts have called for monetary reform either in the form of consistent peg, or a genuine floating rate, which will end balance of payments trouble. (Colombo/Jan08/2020)
The Invisible
The Invisible

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