The government is planning to restructure the small state-owned banks and insurance companies through an equity sharing arrangement with the private sector, a government source said yesterday.

Among the banks and insurance companies identified for restructuring under this Public Private Partnership (PPP) model are Lankaputhra Development Bank and the MBSL Insurance Company.

The Public Enterprise Development Ministry has already initiated discussions in this regard. In this case, the private sector will be offered 49 percent of equity in the banks or the insurance companies identified for restructuring under the PPP model. Alongside, the management will also be vested with the private sector.

According to the source, the government will retain the remaining 51 percent of equity.

“We have identified a number of such small banks and insurance companies to be restructured. They are not doing well enough at the moment. So, we need to restructure them under the PPP model,” the source said.

The government, which assumed office in 2015, proposed the PPP model for the state enterprises currently operated at a loss. (Kelum Bandara)