State banks, according to their annual reports, make a healthy profit every year. They are running smoothly without giving any burden to the treasury and credit their profit to the government consolidated fund annually while providing necessary financial assistances to the development of the country.
However, the People’s bank’s bad debts and the non-performing loans of the Bank of Ceylon have increased to Rs.170 billion during the past ten years. This was reported by the media last week under the headline of ‘state banks in debt crises’. According to editorial of a Sinhala daily, the Ceylon Petroleum Corporation has to pay three hundred billion Rupees to Bank of Ceylon and People’s Bank. Meanwhile, some government owned institutions have defaulted their payment to the CPC. It is difficult to understand why the authorities concerned do not take prompt action regarding this issue since Bank of Ceylon and People’s bank are heart of our economy. If this sad state of affairs will continue who will take the responsibility of bad debts in state banks?
On the other hand the recent controversial share market deal between the NSB and a finance company has badly affected the reputation of the bank and also created a doubt among the general public regarding the stability of the state banks. Although, people receive negative return over their money deposited by them in state banks they are compelled to do so because of the guarantee given by the government.
The politicians who are known for corruption, bribery and misuse of power put the blame on the management of the banks when state institutions have fallen into this present situation due to their own fault. Sometime officials of the state owned enterprises have to follow the instructions of the chairman or secretaries of the ministries who are appointed by the president or ministers. This has become a usual practice of every government that came into power after 1972. The powerful Independent Public Service Commission was abolished in the same year. State banks have to follow government policies and instructions while doing banking within the highly competitive banking environment.
The Ceylon Bank Employees’ Union should be alert because what is happening is not good for state banks. They have to follow in the footsteps of their past leaders who bravely stood up on many occasions not only for the employees’ rights but also to save state banks.
(Writer is an ex-bank employee who joined the Bank of Ceylon in 1970)