Union Bank's bold bid to rewrite SL's banking order

Sri Lanka's banking sector has emerged from one of its darkest periods, scarred but standing. The near-collapse that once loomed large has given way to a fragile recovery, yet the industry now finds itself at a defining juncture. Debt restructuring may have bought breathing space, but with political shifts, easing restrictions, and digital disruption reshaping the landscape, banks no longer have the luxury of complacency.

- BY Shabiya Ali Ahlam

For Union Bank's Director and CEO Dilshan Rodrigo, this is a warning and a window of opportunity. Rodrigo recently sat down with Mirror Business to share his perspective on how the sector clawed back from crisis, why Sri Lanka's next growth cycle must be anchored in a production-driven economy, and how Union Bank, under the wings of the CG Group, is positioning itself as a digital-first contender in a market primed for transformation.

Following are excerpts of the interview:

: How would you assess the current state of Sri Lanka's banking industry?

We went through a very difficult period. From 2019 to 2024, growth in the banking sector was minimal, and there were real concerns about sustainability. At one point, people genuinely feared that banks could fail.

We’ve come a long way since then, largely because of the efforts by both the Central Bank and the banks themselves to support customers and revive businesses. Business revival was critical, if businesses collapsed, banks would have gone down with them. During the worst of it, nearly 40 percent of bank loan books were not being serviced. That alone could have brought down the sector.

IMF’s involvement was pivotal. The restructuring of loans, along with agreements on international sovereign bonds, allowed banks to write back significant provisions that had been made for bad debt, both from customers and the government. That relief, which was never anticipated, gave the larger banks a major earnings boost. But that was a one-off.