India’s ICICI Bank Limited has withdrawn from Sri Lanka’s capital, Colombo, according to the island’s banking regulator, Economy Next reports.
The bank's licence will be cancelled with effect from October 23, 2020. In 2019, both the ICICI bank and Axis bank applied to exit Sri Lanka.
“The Monetary Board of the Central Bank of Sri Lanka, having considered the request made by the ICICI Bank Limited, India, has granted approval to close down business operations of ICICI Bank Limited in Sri Lanka and cancel the licence issued to it in terms of the provisions of the Banking Act, No. 30 of 1988, subject to several terms and conditions,” the regulator said in a statement.
The central bank’s exit from Sri Lanka comes as the island continues to struggle through a major economic crisis. Earlier this month Sri Lankan prime minister Mahinda Rajapaksa requested assistance from India, including debt repayment deferrals, to aid the island's struggling economy.
The economy has contracted by by 19.5 percent. In the first quarter of 2020, the economy contracted by 1.6 percent from the previous year after growing by 2.3 percent in 2019. The fall was driven by ““persistently weak revenue from textile garment exports, tourism and overseas remittances,” said Moody’s Investor Service.
The Sri Lankan economy, the survey notes, contracted by 1.6 percent in the first quarter of 2020 after growing by 2.3 in 2019. The fall was driven by weak performances in the construction, textile, mining and tea industries.
Sri Lanka’s credit rating is just one above debt default and in the same league as Iraq, Angola, Congo and Mali.
The Rajapaksa government has not released any data on job losses caused by the pandemic but the labour department reported that in July nearly 400,000 jobs were lost in the manufacturing sector alone. Over 40 percent of Sri Lankan workers are employed in the informal sector, who make up 68 percent of Sri Lanka’s workforce and have been severely effected.
Workers will experience a decline in savings and will be forced to resort to losing out on education and health, widening existing inequalities.
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