EIGHT commercial banks tn Srl Lanka are to operate Swiss style numbered bank accounts.

This is yet another innovation in Sri Lanka's commercial banking system to attract for eign money into the country and make Colombo an International Financial Centre.

Sri Lanka is probably the first country in the East to introduce numbered — or secret — bank accounts.

Announcing this, the Governor of the Centra) Bank. Dr Neville Karunatilleke. said : "We will not accept money if it is known that it is obtained as a result of illegal operations. But the latmdrymen are not in this country, and the laundering is done overseas. Only clean linen will be brought here."

Dr. Karunatilleke was responding to fears voiced in Parliament by some members who felt numbered accounts would help foreign exchange earned in dubious ways. Others thought it was a sellout to foreigners and would affect the moral well-being of the country. It would give cover to black money and encourage-black money, critics said.

However, many in the business community feel it would help attract foreign investment and is another step in the process initiated in 1977 to liberalise and open the economy. They point out that if it works it may help the country ease some of its economic problems.

The Monetary Board of the Central Bank here has given banks the absolute discretion In the opening of these ac-

counts. The Banks have the freedom of designing and de vising their own operational details. They can pay interest or charge the customer a fee for maintaining an account.

The banks arc permitted to open numbered accounts only for foreigners or Sri Lankans who arc non residents. A Sri Lankan is deemed to be nonresident if he or she has been abroad for a continuous and unbroken period of 12 months.

The facilities offered under this scheme are current accounts. deposit accounts and savings accounts. Deposits are accepted in eight foreign currencies — US dollars. Sterling Pounds, Deutsche Marks. Swiss Francs, Japanese Yen. Australian dollar. Singapore dollars and French Francs.

The minimum deposit to open an account is US# 1.000 or its equivalent in any of the authorised currencies.

Divulging the identity of the owner of the numbered account or divulging any related information is absolutely pro-HiKfted Pweent1nn« nrr when the depositor permits it; legal proceedings are instated by or against the owner IRhis information has to be divulged in accordance with a provision of law giving effect to an international convention on narcotics or hijacking; or by an order of the Supreme Court of Sri ixinka on the ground that the account Is being used for terrorist purposes.

Banks operating numbered accounts are expected to handpick the staff to maintain stringent secrecy requirements. Banking sources say they have to ferret out likely customers and personally convince them of the efficacy of the numbered accounts.

The same sources say the banks are very likely to take a hard look at the identity of potential customers to avoid any problems later on. They would profit by the experience of banks already operating such accounts and would always safeguiftd the integrity of their banks.

Experienced bankers are emphatic it will not be easy to sell this business. Customers already having numbered ac-counts in sophisticated bank-' ing centres are not likely to move away. Some foreign commercial banks operating here already have numbered accounts in their centres overseas and may not come into the scheme.

Customers also have to be convinced of the stability of the economy and the political situation. They must have confidence in the local banking system, above all. they must be confident the bank would protect their interests against all odds, even in court.

The same sources feel the big foreign commercial banks operating here would be better equipped to convince customers on these points. They are already known to customers worldwide as sound bankers.

These sources feel there could be interest in these ac-counts in South Asian countries. This would be the immediate market There are no numbered accounts in these countries and there is plenty of money looking for num-bered accounts.

Since 1977 commercial banks have been developing to meet Srl Lanka's new liberalised economic policy. A new dynamism has been injected into it and old attitudes have changed.

Foreign commercial banks, and more private Str Lankan banka have been permitted to commence business. There are now 18 foreign banks here and competition is keen. Novel deposit mobilisation schemes and many innovative measures have been introduced to cover the requirements of the free trade investment promotion

zones and other business or

Limited offshore banking activities were Introduced In 1979 which was considered a significant step to expand banking services

Several other innovations have also been introduced, like the Non-Resident Foreign currency Accounts to attract Investments from Sri Lankans earning abroad. Merchant banking commenced in 1980 and the development of the Financial Market became an ongoing process.

New customer services like electronic teller machines have been installed with 24-hour facilities Accelerated cheque clearing through an Automated Clearing House ' commenced in 1988 and a variety of credit cards are now In vogue.

With the removal of the prohibitive 100 per cent tax on the purchase of shares by foreigners and the liberal concessions granted to these investors. several foreign companies have intervened to purchase stock in Colombo's Stock Exchange and have helped boost share market activities

All these measures are quP etly transforming Colombo's banking and financial activities Into a competitive, sophisticated and innovative financial centre. — Depthnews Asia.