DEG supports sustainable financial sector development in Sri Lanka

The Sri Lankan financial sector is launching the implementation of sustainability guidelines. This is the next step in the local Sri Lanka Banks’ Association’s (SLBA) "Sustainable Banking Initiative”. The mutual guidelines were approved at the end of 2015 by 18 local financial institutions including DEG’s customers Hatton National Bank, National Development Bank and DFCC Bank. DEG has supported the initiative from the outset and assisted in the designing of the principles in terms of content.

The guidelines are now about to be implemented. This will mainly involve developing and holding workshops, e-learning sessions and training for employees of the financial institutions. DEG is cofinancing the development of the e-learning platform and various training and coaching measures in cooperation with three development finance institutions, the Dutch FMO bank, the Austrian OeEb and French PROPARCO. To this end, it is providing funds from its Business Support Services (BSS).

Eleven principles for a sustainable banking sector

One aspect of the principles is that financial institutions recognise negative impacts their business can have on the environment and local communities in the loan issuing process, and minimise or prevent them entirely. Furthermore, the principles aim to improve governance structures and advance financial inclusion to ensure that the banking sector plays an adequate role in sustainable development in Sri Lanka.

Participating banks also benefit from the sustainability guidelines. For instance, they help banks improve their risk management and customer relations.

DEG also assists in the setting up of sustainability principles in the financial sector in other countries, for example, through supporting similar initiatives in Nigeria, Kenya and Paraguay.