by Pac-man Today at 10:25 pm
» TAFL is the shine star in 2015
by EPS Today at 10:03 pm
» foreigners on BFL.
by EPS Today at 9:57 pm
» this is to chicken lovers u all will go to hell
by shadow walker Today at 9:29 pm
» Wish Karuna
by Karuna Amman Today at 9:25 pm
» I am with malina
by Karuna Amman Today at 9:23 pm
» gran tafl bfl impact
by nalinrperera Today at 9:20 pm
» reg. share transaction levy and witholding tax
by ramanesh Today at 8:45 pm
» Why does not sampath accept online statements as bank statement to issue credit card
by Yahapalanaya Today at 8:05 pm
» Why market is going down?
by sisira.wijeweera Today at 7:16 pm
» 2016 vs budget vs bank vs financial
by karuna Today at 6:16 pm
» Could ASI reach 6500?
by Dhehan Today at 5:07 pm
» ACME The labour union instituted an action against the company
by lossorgain Today at 4:51 pm
» be mindful about banking sector
by capitallinkceylon Today at 3:31 pm
» Secrete of market going down
by karuna Today at 3:25 pm
» The beautiful thing about the market
by Asoka Samarakone Today at 1:59 pm
» ADMIN where are you ???
by vic19 Today at 12:54 pm
» CPRT Announcement RIGHTS ISSUE Oversubscribed
by Gainer Today at 12:41 pm
» 44 signed-no-confidence-motion-against-Ravi k
by nalban Today at 12:38 pm
» no doubt Budget will pass easily
by nalban Today at 12:36 pm
» CITW analysis
by Mubin Mustafa Today at 11:42 am
» tueday will paint green
by Mubin Mustafa Today at 11:40 am
» cse history biggest freak citw right issue
by karuna Today at 11:09 am
» shake the tree and collect the fruits
by Mubin Mustafa Today at 10:59 am
» Premature Ejaculation
by Mubin Mustafa Today at 10:56 am
» see some promotors love CITW
by Mubin Mustafa Today at 10:38 am
» current situation of cse
by Nuwan Samarawickrama Today at 10:05 am
» maximum loan-to-value ratio for vehicles reduced to 70%
by capitallinkceylon Today at 8:43 am
» Yahapalanaya government
by nalaka_sg Today at 5:13 am
» WHY FOREIGN FUND MANAGERS AVOID CSE
by chamith Yesterday at 11:45 pm
» WORLD OIL PRICE TREND AND SRI LANAKA.
by nuwan85 Yesterday at 2:20 pm
» HOT TOPIC NDB AND ASPI???
by worthiness Yesterday at 1:56 pm
» now whats the current situation of share market???
by capitallinkceylon Yesterday at 11:43 am
» MPs TO GET DUTY FREE VEHICLE PERMITS
by samaritan Yesterday at 10:35 am
» අයවැය කපෝති ද ? Budget Blunder
by karuna Yesterday at 9:44 am
» Even insurance industry will be worse off
by capitallinkceylon Yesterday at 9:33 am
» continue to provide the fertilizer subsidy
by Teller Yesterday at 1:12 am
» what do you think?
by GameUP1030 Sat Nov 28, 2015 9:24 pm
» CSE Chairman's comments on the budget
by GameUP1030 Sat Nov 28, 2015 9:00 pm
» Good time to look at DOCK and ESL again
by charith666lk Sat Nov 28, 2015 8:00 pm
» ANATOMY OF "YAHAPALANAYA" - By Prof.G.L.Peiris
by nalaka_sg Sat Nov 28, 2015 7:29 pm
» SFL is on the way to fly...!
by GameUP1030 Sat Nov 28, 2015 7:01 pm
» forum banner
by karuna Sat Nov 28, 2015 6:51 pm
» Wondershare Dvd Slideshow Builder Deluxe 22.214.171.124 Serial Key
by quitedorr Sat Nov 28, 2015 5:56 pm
» Rajitha Senarathna bribes Avanguard 5m Rs and sends the money back when it was revealed.
by samaritan Sat Nov 28, 2015 3:04 pm
» look at ABL
by Mubin Mustafa Sat Nov 28, 2015 3:01 pm
» Budget 2016.. My analysis!
by peacockman Sat Nov 28, 2015 8:52 am
» JKH - CONVERSION OF WARRANTS
by peacockman Sat Nov 28, 2015 8:49 am
» SELLING PRESSURE on banking sector counters in CSE
by peacockman Sat Nov 28, 2015 8:47 am
» Most affected Banking share
by peacockman Sat Nov 28, 2015 8:38 am
» KEEP on EYE to TJL, OSEA, DIPD....
by peacockman Sat Nov 28, 2015 8:09 am
» Why Am I Bullish about AEL
by peacockman Sat Nov 28, 2015 8:06 am
» now u can think pcp.n
by Karuna Amman Fri Nov 27, 2015 11:52 pm
» YAHAPALANA WINS, VAS GUNAWARDENE CONVICTED
by Yahapalanaya Fri Nov 27, 2015 11:09 pm
» HNB Interim dividend
by vic19 Fri Nov 27, 2015 9:24 pm
» The oil Trend....
by worthiness Fri Nov 27, 2015 8:20 pm
» Several IPOs slated for CSE next year
by peacockman Fri Nov 27, 2015 6:25 pm
» Market will go up...
by peacockman Fri Nov 27, 2015 6:18 pm
» ROYAL CERAMICS LANKA FURTHER PRICE DROP (RCL.N0000) – Expected Price Rs 70 - 80
by peacockman Fri Nov 27, 2015 6:06 pm
» #LFIN - WORTH RS 220/- @ 10 PE
by Mr. Belfort Fri Nov 27, 2015 5:14 pm
» U.K. stocks are shaken by China
by peacockman Fri Nov 27, 2015 3:56 pm
» Stock Exchange to get CCP from 2017
by peacockman Fri Nov 27, 2015 3:42 pm
» Sri Lankan shares post 4-1/2 month closing low on budget worries
by peacockman Fri Nov 27, 2015 3:41 pm
» Sri Lanka stock exchange to set up counterparty unit, mulls derivatives
by ashaprakash Fri Nov 27, 2015 12:27 pm
» SLND Should Go for Sub Division of Shares
by Gainer Fri Nov 27, 2015 12:24 pm
» GSF big story behind the curtain
by dumifer Fri Nov 27, 2015 11:09 am
» Embark of Mubin
by Mubin Mustafa Fri Nov 27, 2015 10:31 am
» BANKS CAN OVERCOME LEASE BAN
by samaritan Fri Nov 27, 2015 10:27 am
» Dhammika Ranathunga starts robbing 268 million in port deal.
by Ryan Hudson Fri Nov 27, 2015 8:43 am
» MY3 Dudly Araliya Group to earn billions thru paddy price reduction
by Ryan Hudson Fri Nov 27, 2015 8:42 am
» VONE win with VONE
by chamith Fri Nov 27, 2015 6:10 am
» Thanks Mr. Admin again
by Chinwi Thu Nov 26, 2015 11:17 pm
» US$ 3M FDI
by fireshelter Thu Nov 26, 2015 10:29 pm
» Black listed people
by Mubin Mustafa Thu Nov 26, 2015 9:46 pm
» EDEN right issue at Rs 20. Current market price Rs 18. NAV -Rs 40. Last quarter traded at Rs 24
by Udara Rangana Thu Nov 26, 2015 8:30 pm
» SFL N no sellers.. blast out soon!
by Madu@1 Thu Nov 26, 2015 8:12 pm
» why most of brokers are recommend to buy KHL and ASCOT(w)??
by Udara Rangana Thu Nov 26, 2015 8:01 pm
» NTB, NDB falling...
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» The whole economy will be affected- if no confidence motion submitted
by Chinwi Thu Nov 26, 2015 6:43 pm
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by Prabhakaran Thu Nov 26, 2015 6:16 pm
» EU to lift ban on fish export
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» TESS- over 100% return
by Trend Thu Nov 26, 2015 5:27 pm
» AINV (ADAM INVESTMENT PLC)
by anges Thu Nov 26, 2015 5:11 pm
» Lanka Hospital
by Janu Thu Nov 26, 2015 2:20 pm
» When to collect JKH?
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» Did government tax hike on fund Management companies ????
by Nuwan Samarawickrama Thu Nov 26, 2015 1:31 pm
» AINV Good Announcement Pending
by charith666lk Thu Nov 26, 2015 12:10 pm
» AINV 3.7 last week today 3.0 what do you think?
by A2Z Thu Nov 26, 2015 10:54 am
» ther is not such no confiden motion
by Mubin Mustafa Thu Nov 26, 2015 10:37 am
» i feel more stocks may be dark for medium term
by fadhlilham Thu Nov 26, 2015 10:21 am
» BvsB vs AINV?????????
by TIRAN712 Thu Nov 26, 2015 10:10 am
» 100% guarantee on deposits at non banking sector is QUESTIONABLE
by Quibit Thu Nov 26, 2015 10:05 am
» Sri Lanka Treasuries yields fall
by peacockman Thu Nov 26, 2015 10:03 am
» Blanket guarantee for Finance Companies questionable: Theagarajah
by peacockman Thu Nov 26, 2015 9:57 am
» Exemption on share trading capital gains to continue
by peacockman Thu Nov 26, 2015 9:55 am
» PARQ vs ACL vs AEL
by peacockman Thu Nov 26, 2015 9:35 am
» Worst promoters ever
by vic19 Thu Nov 26, 2015 2:32 am
» Karuna go home
by gayanath1983 Thu Nov 26, 2015 12:07 am
» EquityChamp think he is a good promoter
by Teller Wed Nov 25, 2015 8:27 pm
Fitch said in an report on the outlook on Sri Lankan banks that loan to deposit ratios of some banks with "less mature deposit franchises" are approaching 100 percent.
Loan to deposit ratios have risen from about 77 percent by end-2010 to 80 percent by June 2011. By September loan to deposit ratios of banks tracked by Fitch had risen to 90 percent.
Sri Lanka's Central Bank started to defend a dollar peg actively from around July by selling foreign exchange to banks in return for rupees as credit growth picked up and put pressure on a dollar soft peg.
The foreign exchange interventions caused liquidity shortages, forcing rates up, even though there has been no formal raising of policy rates.
Fitch said deposit rates have risen and bank net interest margins were shrinking.
To prevent rates rising further, the Central Bank offset or 'sterilized' interventions in the forex market by purchasing Treasury bills including from banks and injecting liquidity (printing money) in to money markets.
The liquidity fuels new credit, triggering fresh imports, resulting in further reserve losses, creating a vicious cycle of expansionary sterilized interventions.
Balance of payments crisis are a problem associated with so-called 'soft-pegged' central banks which try to target an exchange rate and then also tries to control interest rates by printing money.
Fitch said banks have been selling down liquid assets held largely in the form of government securities which are gradually channelled into lending, though lenders have to keep at least a 20 percent liquid asset to total liabilities ratio to meet regulations.
The Central Bank held 180 billion rupees of Treasury bills in its domestic asset portfolio by January 2012 from near zero in July 2011 as balance of payments pressure gathered pace.
Banks are now paying as much as 12 percent or more for customer deposits but 3-month Treasury bills yield as little as 8.67 percent and 12-month bills only 9.30 percent creating an incentive to get rid of Treasuries.
LBO's economics column warned over five months ago that banks were not raising enough deposits to fund rising credit growth and that the country was heading towards a balance of payments pressure and rates have to be allowed to move up fast to prevent the peg breaking.
"There is a persistent imbalance between loans made and deposits raised by the banking system, indicating that a market clearing interest rate is needed to maintain the peg to the US dollar," LBO's economics columnist fussbudget warned in August.
"To head off any 'balance of payments' problem the central bank has to weaken the rupee or allow interest rates to go up. If neither happens, credit expansion is on track to crash land in the balance of payments."
When banks raise deposits consumption is curbed (reducing pressure on the forex market) and only that 'demand' is released as credit.
But when Treasury bills are sold to the Central Bank, newly printed money is expansionary generating new aggregate demand and pressure on the peg through imports.
"Deteriorating loan to deposit ratios and declining liquid assets demonstrates in practice how this phenomenon works through the balance sheets of banks," LBO's economics columnist fuss-budget says.
"It is also interesting to note that the decline in liquid assets is the first step of how a currency crisis transforms into a banking crisis.
"The emerging trends in the banking system should be carefully noted and not forgotten so that interest rates are allowed to move up in the future without delay so as to head off episodes to balance of payments pressure as soon as credit growth becomes too strong."
A fully fledged banking crisis happens when interest rates rise and remain at levels for long enough so that it no longer makes sense for businesses to borrow and they start to default and bad loans mount.
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Do you think foreign funds will hold back equity purchases in anticipation of another devaluation?
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