Home
Register
May 05, 2014 (LBO) - Sri Lanka's credit from commercial banks fell 0.9 billion rupees to 2490.7 billion rupees in February 2014 from a month earlier, the second month that private credit has fallen in absolute terms.
In January the outstanding private credit stock fell 42.7 billion rupees, the first month credit has shrunk in the wake of the latest balance of payments crisis.
Following the 2008/2009 balance of payments crisis, private credit fell for eight months in a row.
Analysts says following a balance of payments crisis, which is triggered by a credit bubble, de-leveraging is a natural as risky loans taken during the bubble period is purged and firms try to strengthen their balance sheets by reducing debt.
It is part of a standard credit or business cycle that allows both borrowers and lenders to emerge stronger following a burst bubble.
As interest rates fall following a balance of payments crisis, many firms also try to pay off high interest rates loans and refinance at a lower rates before taking new loans.
Central Bank officials have said that a reduction is gold-backed loans was a key reason for slower lending to the private sector after precious metal prices fell sharply in 2013. There were also foreign borrowings by larger private firms.
Meanwhile some firms have also been floating tax free debt in the stock exchange. It is not clear whether the ongoing banking consolidation process is also contributing to the trend with management attention focused on the process.
Credit to government also fell 25.1 billion rupees to 1,344.6 billion rupees with loans from domestic banks falling t 989.2 billion rupees from 1,020 billion a month earlier.
In January the state sold a billion US dollar bond and has paid back some Treasury overdrafts.
Weak credit growth following balance of payments troubles allows a central bank to withdraw rupee liquidity and build up foreign reserves and also strengthen the exchange.
http://www.lankabusinessonline.com/news/sri-lanka-private-credit-shrinks-for-second-month/1667159038
In January the outstanding private credit stock fell 42.7 billion rupees, the first month credit has shrunk in the wake of the latest balance of payments crisis.
Following the 2008/2009 balance of payments crisis, private credit fell for eight months in a row.
Analysts says following a balance of payments crisis, which is triggered by a credit bubble, de-leveraging is a natural as risky loans taken during the bubble period is purged and firms try to strengthen their balance sheets by reducing debt.
It is part of a standard credit or business cycle that allows both borrowers and lenders to emerge stronger following a burst bubble.
As interest rates fall following a balance of payments crisis, many firms also try to pay off high interest rates loans and refinance at a lower rates before taking new loans.
Central Bank officials have said that a reduction is gold-backed loans was a key reason for slower lending to the private sector after precious metal prices fell sharply in 2013. There were also foreign borrowings by larger private firms.
Meanwhile some firms have also been floating tax free debt in the stock exchange. It is not clear whether the ongoing banking consolidation process is also contributing to the trend with management attention focused on the process.
Credit to government also fell 25.1 billion rupees to 1,344.6 billion rupees with loans from domestic banks falling t 989.2 billion rupees from 1,020 billion a month earlier.
In January the state sold a billion US dollar bond and has paid back some Treasury overdrafts.
Weak credit growth following balance of payments troubles allows a central bank to withdraw rupee liquidity and build up foreign reserves and also strengthen the exchange.
http://www.lankabusinessonline.com/news/sri-lanka-private-credit-shrinks-for-second-month/1667159038
» CCS.N0000 ( Ceylon Cold Stores)
» Sri Lanka plans to allow tourists from August, no mandatory quarantine
» When Will It Be Safe To Invest In The Stock Market Again?
» Dividend Announcements
» MAINTENANCE NOTICE / නඩත්තු දැනුම්දීම
» ඩොලර් මිලියනයක මුදල් සම්මානයක් සහ “ෆීල්ඩ්ස් පදක්කම” පිළිගැනීම ප්රතික්ෂේප කළ ගණිතඥයා
» SEYB.N0000 (Seylan Bank PLC)
» Here's what blind prophet Baba Vanga predicted for 2016 and beyond: It's not good
» The Korean Way !
» In the Meantime Within Our Shores!
» What is Known as Dementia?
» SRI LANKA TELECOM PLC (SLTL.N0000)
» THE LANKA HOSPITALS CORPORATION PLC (LHCL.N0000)
» Equinox ( වසන්ත විෂුවය ) !
» COMB.N0000 (Commercial Bank of Ceylon PLC)
» REXP.N0000 (Richard Pieris Exports PLC)
» RICH.N0000 (Richard Pieris and Company PLC)
» Do You Have Computer Vision Syndrome?
» LAXAPANA BATTERIES PLC (LITE.N0000)
» What a Bank Run ?
» 104 Technical trading experiments by HUNTER
» GLAS.N0000 (Piramal Glass Ceylon PLC)
» Cboe Volatility Index
» AHPL.N0000
» TJL.N0000 (Tee Jey Lanka PLC.)
» CTBL.N0000 ( CEYLON TEA BROKERS PLC)
» COMMERCIAL DEVELOPMENT COMPANY PLC (COMD. N.0000))
» Bitcoin and Cryptocurrency
» CSD.N0000 (Seylan Developments PLC)
» PLC.N0000 (People's Leasing and Finance PLC)
» Bakery Products ?
» NTB.N0000 (Nations Trust Bank PLC)
» Going South
» When Seagulls Follow the Trawler
» Re-activating
» අපි තමයි හොඳටම කරේ !
» මේ අර් බුධය කිසිසේත්ම මා විසින් නිර්මාණය කල එකක් නොවේ
» SAMP.N0000 (Sampath Bank PLC)
» APLA.N0000 (ACL Plastics PLC)
» AVOID FALLING INTO ALLURING WEEKEND FAMILY PACKAGES.
» Banks, Finance & Insurance Sector Chart
» VPEL.N0000 (Vallibel Power Erathna PLC)
» DEADLY COCKTAIL OF ISLAND MENTALITY AND PARANOID PERSONALITY DISORDER MIX.
» WATA - Watawala
» KFP.N0000(Keels Food Products PLC)
» Capital Trust Broker in difficulty?
» IS PIRATING INTELLECTUAL PROPERTY A BOON OR BANE?
» What Industry Would You Choose to Focus?
» Should I Stick Around, or Should I Follow Others' Lead?