Two state-run banks have written of billions of rupees of debt, after years of loans granted by the state not being repaid.
It was announced in the Sri Lankan Parliament on Friday that the Bank of Ceylon has written off Rs.116.5 billion whilst the People's Bank has written off Rs.85.7 billion.
It was further stated that in 2011 the People's Bank had written off Rs.788 million; Rs.316 million in 2010; Rs.157 million in 2009 and Rs.787 million in 2008. A letter sent by the Additional General Manager Bank of Ceylon also noted that the Bank of Ceylon had written off Rs. 11.3 billion in 2011, while the total written-off since 2001 amounted to a total of Rs. 161.7 billion.
Sri Lanka’s state banks have largely operated with state patronage, lending money to the principally Sinhalese supporters of the state.
See our earlier post: Bank lending and ethnicity (27 Jan 2011)
In January 2011, the state’s Sri Lanka Mortgage and Investment Bank (SMIB) had 37% it’s total lending was non performing. In other words, over a third of borrowers are not making repayments.
It was also stated in the Parliament that the state-run Lankaputhra Bank had a non-performing loans rate as high as 50%.
A motion moved to identify the debtors was also rejected by Justice Minister Rauff Hakeem.
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