Backbone of Economic Growth

Jonathan Alles explains how the banking sector has supported businesses in their growth journey

Along-term vision and foresight – in addition to good governance, prudent boards, and committed teams of bankers across the state and private sectors – serve as the backbone of the nation’s economic trajectory, asserts Jonathan Alles – the Managing Director and CEO of Hatton Nation-al Bank (HNB).
The banker adds: “The sector’s tenacity is being tested on multiple fronts, be it the domestic demand for credit, dollar liquidity, banking the unbanked and underbanked or driving digital inclusion in rural villages. And banks are responding with zeal.”
With the onset of the pandemic, the single major support measure for SMEs has been the moratoria and revival programme.
Gartner’s model for tackling a global pandemic emphasises three pivots – viz. response, recovery and renew. And the local banking sector lost no time in moving in this direction.
Banking was listed as an essential service so while healthcare workers have combatted COVID-19 on the front lines of hospitals, bankers processed loan relief applications in the hundreds and thousands – running into a colossal national figure of several billions.
On the renewal aspect, Alles explains: “We have seen banks taking proactive measures to manage the demand for dollars by reaching out to customers and buffering the surge in the system.”
“Similarly, be it for post-COVID business revival, or supporting national pandemic related expenditure, austerity measures or meeting the de-mand of the retail segment, the sector has rallied to infuse oxygen into the system.”
For longer term measures – such as state led mega mixed development projects, the reorganisation of state owned entities, capital market de-velopment and developing infrastructure among others – the banking sector is poised and positioned to shoulder the national responsibility.
“The unbanked are being brought into the mainstream – especially the digital ecosystem. Banks and non-banking financial institutions (NBFIs) have launched mobile apps that cater to all demographics in the island. Some of these apps are trilingual and in particular, serve the bottom of the pyramid, which reflects the commendable leadership by the financial services industry as a whole,” Alles adds.
Typically, the SME journey begins with modest owner’s equity and grows with debt leverage, as he points out: “In Sri Lanka, this has be-come the traditional story of the sons of the soil who have embarked on entrepreneurship journeys, painstakingly ventured into business and been credit shy at a point; but with foresight and wisdom, were able to reap the benefits of banking facilities to grow, diversify and even com-mence offshore operations.”
“I see younger and new generation entrepreneurs sporting an open outlook towards debt capital. A sound understanding of the market and one’s business model, and a strong grip on operations and finances, has served entrepreneurs in building and growing their SME businesses,” Alles observes in summing up.