Redefining Finance: The Rise of Non-Banking Financial Institutions in Sri Lanka

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Non-Banking Financial Institutions (NBFIs) have become a transformative force within Sri Lanka’s financial sector, which offers a wide range of financial services outside the traditional banking sector. These NBFIs do facilitate alternative financial services, such as investment (both collective and individual), risk pooling, financial consulting, brokering, money transmission and check cashing.

                           

Image from https://www.investopedia.com/terms/n/nbfcs.asp

Understanding the difference between banks and NBFIs

Banks are licensed financial institutions authorized to accept deposits and provide a broad range of financial services such as loans, maintain current and savings accounts and do foreign exchange transactions. They are strictly regulated by the central bank of Sri Lanka subject to high capital requirements and other obligations.

In contrast,NBFIs do not accept current account deposits(demand deposits) but can offer services such as leasing, microfinance, insurance, investment services and asset management. While they have an ability to make their own operating models under some obligations but typically more flexible and innovative-driven.

Here are some differences of NBFIs and Banks,

 Image from https://slideplayer.com/slide/2919396/

Now we can go through two standout examples of this evolution, they are Asia Asset Finance PLC and Vallibel Finance PLC. These organizations have demonstrated how bold strategies and digital innovation can reshape the future of finance. We will explore their recent achievements and the significant impact they are making within the sector.

Asia Asset Finance – Pioneering Digital Innovation


                                        Image from https://asiaassetfinance.com

Asia Asset Finance PLC has been leading Sri Lanka’s non-banking financial sector through its forward-thinking digital transformation. The company has revolutionized internal workflows by introducing AMIE, Sri Lanka’s first Agentic AI assistant, which is used to empower staff to instantly access operational, compliance and HR information . This AI-led support system enhances decision-making speed, improves customer response time and boosts overall efficiency. In addition to this, Asia Asset Finance implemented a fully digital and paperless recruitment and onboarding process,where they can eliminate over 50% of manual HR tasks and save more than Rs. 9 million annually.

Asia Asset Finance differs from other NBFIs through its commitment to people-first innovation.The company ensured that digital upgrades were not just about technology, but also about empowering employees and creating long-term value which is guided by Lean Six Sigma principles.  Every advancement reflects a deep focus on operational excellence and customer experience from automated compliance reporting to AI-powered learning platforms and a user-friendly in-house website. These innovations earned Asia Asset Finance the title of Best Financial Company in Digital Transformation, Sri Lanka – 2024, showcasing its industry leadership and future readiness.

Vallibel Finance – Record-Breaking Growth

Vallibel Finance PLC has set new benchmarks within Sri Lanka’s NBFI sector. The company has surpassed Rs. 100 billion in assets in just 17 years, which is recorded as Rs. 111.68 billion in FY 2024/25, becoming one of the fastest growing finance companies in the country.

Image from https://www.vallibelfinance.com/



This growth is supported by their robust business model and strategic expansion. Vallibel Finance now operates over 80 branches, which includes 11 new locations opened in the past year. The company maintains an impressive NPL ratio of  3.56% and also its deposit base grew by 15.1% indicates excellent credit risk management.

The company has also prioritized digital infrastructure and IT development to enhance customer access and employee productivity. Vallibel Finance’s commitment to excellence has been recognized through a BBB+ credit rating and consecutive wins at the Global Economics Awards as Sri Lanka’s Best Finance Company for three years running.

Image from https://www.vallibelfinance.com/news/vallibel-finance-posts-solid-performance-in-very-challenging-year



In conclusion, Non-Banking Financial Institutions like Asia Asset Finance and Vallibel Finance play a crucial role in Sri Lanka’s financial landscape by technological innovation, operational agility and having a focus on financial inclusion providing different kinds of financial services in the modern era.

As these companies continue to grow and evolve, these success stories demonstrate how NBFIs are better than traditional banks which can offer tailored and more impactful financial solutions across the country. With customers' trust, forward-looking strategies and digital transformation at their core, Sri Lanka’s NBFIs are well-positioned to lead the next wave of financial innovation and accessibility.

References


https://economynext.com/brand_voice/inside-asia-asset-finances-digital-transformation/

https://sundaytimes.lk/online/business/Vallibel-Finance-delivers-record-breaking-performance/10-1149739

https://unacademy.com/content/kerala-psc/study-material/science-technology/banking-and-non-banking-financial-institutions/


https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/nonbank-financial-institution



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