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ldblquote Sri Lanka quote s cash reserve requirement should be reduced to at least 5 percent from the current 10 percent.

We have one of the highest cash reserve requirements in the world, which significantly increases the intermediation cost in the financial sector dblquote , notes Mangala Boyagoda CEO Standard Chartered Bank and a key figure behind the upcoming Financial Sector Reforms conference next month.





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rnSince the banks are forced to park 10 percent of their deposits in the zero return reserve, they are forced to pass the additional cost to borrowers through pricing of loan facilities, he said.rn

rnldblquote For example if you take an Rs. 100, 000 deposit at 12 percent per annum, you can only lend Rs.

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90,000 out of it. This increases the effective cost of the deposit to nearly 13.





9 percent, which will be passed on to the borrowers with added taxes and margin dblquote .

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rnHigh reserve requirement will be one of the main issues to be discussed in the reform conference, he said.rn

rnThe lack