In My View Point with Thilini Gunasekera

It’s a great privilege for me to contribute to APB with my article on “Navigating Leadership Challenges in a Volatile Market” on APB Evening Forum.👏

Pls check the following link 👉
http://epaper.dailymirror.lk/epaper/iphone/homepage.aspx -e6e8-4d1e-9485-4912715c505e

CBSL...BLOCKCHAIN AND SHARED KYC PLATFORM!!

A new concept is being pitched by the CBSL named as the “Blockchain based shared KYC Platform”. This will enable a more efficient and effective financial inclusion.
This will be beneficial in streamlining the existing process on onboarding customers and providing a “Digital and Remote” onboarding of new customers. This concept will also reduce the legal burden to be borne by the financial institutions as well.

The CBSL has asked some IT companies for a Proof of Concept(PoC). According to the context literature on Blockchain technology, it is known as a vital feature used in every nook and corner of the world. However, this is challenging because of the privacy issues by the financial institutions.

This can be implemented as a centralized approach or decentralized approach. In the centralized approach, strong significant amount of information can be shared on the blockchain or have one or more off- chain data silos verified through the blockchain. In the decentralized approach, customer has the sole control of data but can be issued with a credential.

Several banks have showed the support to share the KYC platforms. This is also a method to tackle fraudulent transactions and Money Laundering and other illegalities such as TF.

PHASE 3... COMING UP

CBSL together with the GOSL introduced “SAUBAGYA COVID 19 RENAISSANCE LOAN SCHEME” to the adversely affected individuals and businesses. This is a Working Capital loan at 4% interest rate p.a. This is for the businesses with an annual T/O below Rs. 1Bn. However, this is not applicable for businesses engaged in tourism, exports and logistics.

*This scheme has 3 Phases. They expect to disburse Rs.150Bn in WC loans at 4%p.a. The period is 2 years with a grace period of 6 months. Loans are to be disbursed among 20,240 businesses as of 2nd July 20 exceeding Rs.53Bn.

*Phase 1- w.e.f 1st April 2020, CBSL granted approval for 13,926 loans amounting for Rs. 28Bn. Out of approved loans, LCBs have disbursed more than Rs.21 Bn among 10,270 affected businesses as at 2/7/20.

*Phase 2- w.e.f 19/06/2020, CBSL approved 6,314 loans amounting to Rs. 25Bn.

Out of these granted loans, 45% has been granted to services sector led by trade services. The 38% for industry sector and 17% for agriculture.

Phase 3- w.e.f 1 July 2020, CBSL introduced the loan scheme with a credit guarantee and interest subsidy of 5% p.a. to banks to cover their cost of funds. The credit guarantee by the CBSL ranges from 80% for the smaller loans to 50% for larger loans.

Source:- CBSL

TESLA...HAS DONE IT....

“ Tesla” became the most valuable carmaker overtaking Toyota.
The shares has been recorded high and electronic carmaker’s market capitalization overtook Toyota as well.
Investor confidence has been surged since the start of 2020 as there’s elevation in demand for electric vehicles.
According to Reuters, Tesla is now worth more than triple the combined value of U.S. automakers General Motors Co and Ford Motor Co.

Tesla’s shares gained 5% to a record of $1,133, increasing the company's market cap to $209.47 billion.

BP FOCUS ON EXITING... FOSSIL FUEL?

BP agrees to sell its petrochemicals business to Ineos for $5bn. They are focusing on shifting towards greener energy. Covid 19 pandemic hit on the energy sector as the demand for oil has been reduced drastically. BP’s 1Q earnings has been drastically reduced by approximately 66% and the debt levels has been elevated.

In my point of view, the shift towards being “net-zero emissions company” is vital in the current context. The giant energy company may have to revise its strategies and structure should be reengineered for this new vision to adapt greener energy with renewable energy sources such as solar, wind, hydro and geothermal and focus on sustainability.

PRESENTATION ON “IMPACT OF COVID 19 on SL BANKING SECTOR”

1. NIM - NIM is the important factor to assess the performance of banks. With the moratoriums in place, the required interest income is not received by banks. As a result, the NIM is affected. The interest income flows are severely disrupted.

2. Credit and NPA- Credit Mgt. is the main impact for the banks. Loans and advances act as the main contributor to total assets of the financial sector. With the business disruptions, the NPA of the banks might go up. The quality credit growth is reduced. The NPA is total
Banking sector has increased by Rs. 118.5bn which is compared to the increase of Rs.102.5bn in 2019.

3. Fee based income- As any additional charges are not available on stop payment cheques, cheque returns, late payment fees on credit cards and other trade finance facilities. No additional interest is charged on the capital and interest deferred until 30.09.2020.

4.Liquidity and Ratings- With the spread of the pandemic, global money markets are dried out. Every SL bank felt the pain in funding USD requirement with the ratings downgrade by Fitch. The foreign counter parties may not be attracted to lend to other parties. As a result, the banks might have to struggle to tap
Into Intl. Capital markets for funding.

Crisis Like No Other-COVID 19 PANDEMIC IMPACT OF COVID 19 ON SRI LANKAN BANKING SECTOR 9.3 million cases worldwide 479k Total deaths 210 countries or territories 8m people infected worldwide PRESENT SITUATION GLOBAL IMPACT GLOBAL IMPACT SECTORS AFFECTED GLOBAL GDP OIL PRICES UNEMPLOYMENT MARKET CAPITALIZATION STOCK

CBSL AND THE HELICOPTER DROP

CBSL focus on shifting towards a new trend called “Helicopter Drop”. They are taking extensive measures and strategies for the revival of the economy and focus on economic growth after the Covid 19 pandemic hit the SL economy heavily.

The Helicopter drop is a respond to the financial crisis in an economy in order to stimulate the real economy. Several central banks including ECB have taken this measure in the past during the 2008 financial crisis to revive the affected economies.

This is a monetary stimulus strategy and an expansionary fiscal policy which increases the money supply of an economy. This method is different from the Quantitative Easing(QE) which is basically the purchase of govt. bond/other securities to spark economic growth.

In my point of view, the Helicopter Drop doesn’t create any debt and interest rates remained unchanged as this method will boost the economic growth due to the increased demand by the public. However, according to my insights, this will further devalue the rupee as the money supply increases. This will lead to imports becoming more expensive for the importers. This may also lead to over- inflation and the regulators and the officials may need to carefully look into managing this regime appropriately.

BANK OF ENGLAND... WHAT'S NEW?

There are signs that BOE replacing the inflation targeting mechanism as a strategy for economic growth. The focus is on replacing the inflation target (2%p.a. at present) with a goal of increasing Nominal GDP by 4% a year.

GDP is an essential indicator used to track "how healthy is a nation's economy". It is vital for the economists and investors because this measure can track whether the UK economy is in a recession or in a growth stage.

In my point of view, the move will be a prudent measure in reviving the UK economy from the covid 19 economic impact.
The Nominal GDP can help stabilize output fluctuations (business cycle). For instance, during expansions the central bank carries out contractionary monetary policy and during recessions (or lower growth) the central banks conducts expansionary policy. This should stabilize output fluctuations and make business cycle impacts less severe. It is also ideal for emerging and developing economies rather than industrialized economies as those economies are subject to trade shocks.

Targeting Nominal GDP is a superior tool because, BOE can target a single variable that would help anticipate the future debt to GDP ratio and the fiscal policy required to achieve its stabilization.

NIO FOCUS ON LISTING ITS CHINA ENTITY!!!

1. It’s the listing of the “NIO China Entity” and it’s a great news on a new startup firm.
2. NIO’s total revenue in 1Q- $191.46Mn
3. The shares were down 3% early NY trading.
4. As a result of the disruption on the global supply chain disruptions due to the coronavirus outbreak in the automobile industry, the sales in the industry in China tumbled 31% as well. This is a great impact on the sales figure. But now it’s slowly improving with the reduced fear on the covid19 and the new rules and regulations on the grounds in China.
This is a rival for the Famous Tesla company.

In my point of view, Startups have a great potential in SL.All Electric Vehicles(AEV) are high in energy efficiency. These vehicles reduce emissions and environment friendly. They are strong performance. There are low maintenance costs as well. Sri Lanka has a great potential to introduce more AEVs and PHEVs. The young reimagined automotive engineers in Sri Lanka has a great potential to identify the opportunities all over the world. I’m sure we can produce Innovations in the years to come and be one of the South Asia’s no 1 brand and first all electric super car such as Vega Innovations produced in the recent past.

APPLE.. GOOGLE TO REOPEN!!!

Apple and Google to reopen the offices worldwide. Apple focus on reopening approximately 100 stores in the USA. The reopening will be with the new social distancing methods and they also follow the new health and safely measures towards reducing the threat as well.

Google heads towards scaling up the initial capacity of 10% which they started in March up to 30% by September. Almost all the IT firms started the work from home concept due to the spreading of the coronavirus outbreak.

*In my view, “Work from home” is a good initiative. The people can focus more on a quality and productive work because they have more time on focusing on the task they work on. Also for some people the wfh concept is a good advantage because they can start on with “Drop-shipping Business”. They don’t need to stock any items or distribute the products. They merely need to buy the products from a third party.

*The wfh also helps an individual to build the autonomy and share their ideas among other. *This will give more responsibility and accountability towards accomplishing a task by him/herself.
*wfh is a more flexible method of carrying out work and this will lead to more work life balance as well.