• Growth driven by rise in private sector credit and low-interest rate environment
• Time and savings deposits account for 92% of total rupee deposits

Sri Lanka’s banking sector reported an increase by about Rs. 2 trillion in deposits in 2024, closing the year with Rs. 12.3 trillion, a growth in line with the private sector credit flows, Central Bank of Sri Lanka (CBSL) said.

According to the Market Operation Report by the Central Bank, rupee deposit liabilities of licensed commercial banks (LCBs) stood at Rs. 12.3 trillion by the end of 2024, after recording Rs. 10.4 trillion in 2023.

The Central Bank said that a slight increase in the rupee deposit liabilities of LCBs that was observed during the first quarter of 2024, accelerated further in the subsequent quarters of 2024.

“This growth was primarily driven by the rise in deposits reported by the state banks and domestic private banks, in line with the increase in private-sector credit flows, supported by the low-interest rate environment,” the Central Bank said.

It noted that the growth in rupee deposit liabilities of LCBs, which stood at 10.54% by at the end of 2023, increased to 11.05% by the end of March 2024 and then accelerated, reaching 15.36% by end of September 2024, gaining momentum, to 18.43% by the end of 2024.

Credit to the private sector expanded by Rs. 790 billion in 2024 after recording an expansion of Rs. 146 billion in the first half of the year, private credit expanded by Rs. 359.4 billion alone in the last quarter of 2024 after December saw a private credit expansion of Rs. 193.2 billion.

Out of the rupee deposit liabilities, time and savings deposit stood at Rs. 11.4 trillion and demand deposits at Rs. 815 billion, the currency to total deposits ratio decreased to 0.48 in 2024 from 0.64 in 2023.