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Loss-making SMIB faces political pressure in recovering loans

8 April 2024 03:07 am - 10     - {{hitsCtrl.values.hits}}

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The state-run loss-making State Mortgage & Investment Bank (SMIB) has revealed that there are political interferences when the attempts are made to recover long- due loans.   

 

Bank’s General Manager,Thushara Asuramanna, has recently told this to workers and the trade union members at a public meeting explaining the ‘difficult’ situation that the state bank is going through.  
“When we tried to recover certain loans we used to get calls even from the Presidential Secretariat,” Asuramanna, told employees who gathered at the head office at Kollupitiya demanding bonuses for the Sinhala and Hindu New Year.   


As the bank employees were not satisfied with regard to their requests for a New Year bonus, they had surrounded the head office. However, the General Manager who intervened in the situation summoned the employees to the auditorium and explained how over the past few years the bank had been going from bad to worse and ended up with nearly Rs 500 million in losses.  


Bonuses

“To award a bonus of 25% of the salary, the bank requires  several millions of rupees,” the GM has told. Explaining the history of financial struggle, Asuramanna has said that by the middle of 2022, there were around Rs 50 million in loans.   


At the meeting he had detailed that with the interests going up by the middle of 2022, the bank took actions to maintain the fixed deposits by giving high-interest rates. By the end of 2022 the cost went up to about 21 million from 8 million.   
He has said that in the year 2022, around Rs 48 million operating loss was faced by the bank and this went up to a total of about Rs 500 in 2023.   

 

However according to the GM one of the main reasons for bank’s failure was taking actions on individuals and not following due banking procedures

 


Amidst the massive losses, the Central Bank has proposed a merger which the bank management has required time for recovery. However, during the meeting, the GM had said that the bank’s loss was not due to workers but outside events. I don’t think this happened due to any fault by the workers. However according to the GM one of the main reasons for bank’s failure was taking actions on individuals and not following due banking procedures.  
He said that there are about ten loans which had not taken action to recover. In some loans for nearly 3 years no action was taken to settle them. The General Manager had admitted there are delays to take action. However some debtors had given assurances to sell their other assets and recover the loans, he has told the bank employees.   


“This issue had come up at the Audit inquiries and even during COPE and even the Central Bank had inquired about this” the GM told the employees.   
“We have not gone for legal actions,” he said.   

 

 


Recovery path

The GM admitted that some loans are not in the 100% recovery path.   
“There are also reasons from external parties. Sometimes when we try to take action, it is not like a private bank we get even calls from the Presidential Secretariat. In some cases, recovery process does not take the speed we expect. Now we have decided to take some action and the Central Bank is keeping an eye on them too.” GM Asuramanna has said.  


It was revealed that bank had given business loans to some influential parties who delayed the payment. “Some of these loans released before the Covid-19 pandemic had gone to relatives of former politicians. During the Covid- 19 period they had been given a moratorium as well,” the Bank Union spokesman told.   


Last October, the Parliamentary watchdog Committee questioned the bank’s failure to recover a sum of Rs 68 million lost due to a loan scam dating back to 2017.  
The COPE had revealed the unsettling delays in the recovery process, despite six years having passed since the incident.  
The COPE Committee had issued an order for SMIB officials to submit a comprehensive report to the Committee.  

 

Chairman’s response   


When Daily Mirror contacted the Chairman of the SMIB, Joseph Soosaithasan he said that some action has been taken to award New Year bonuses to the employees. However, he asked to contact him today (8) to respond to the bank losses and the political influence when tried to recover loans.  


  Comments - 10

  • sacre blieu Monday, 08 April 2024 10:42 AM

    This organised default of loans and the writing off has been going on for years, and this includes political as well as internal dishonesty and deliberate avoidance of proper action. How about when the stock market was run like a cesspit and even dead duck stocks were raised to phenomenal price levels and banks forced to buy them, and where none of the GM's never had the backbone to protest. Greek bonds and all.

    Roshanaly Monday, 08 April 2024 12:07 PM

    The reveal the name of the defaulted person, so that the public will know which Politician is behind them.

    De Silva Dharmasena Monday, 08 April 2024 07:58 PM

    By law, you can not divulge name or anyother details regarding a customer

    Sal Tuesday, 09 April 2024 07:48 AM

    Pls disclose the names to the public and the politicians too behind the scene or prepare a website so any interested party can be aware.

    Sambo Tuesday, 09 April 2024 08:13 AM

    Huge loans have been released as well on the recommendation of politicians and some times these amounts debited to departments and corporation without their notice. That's how many politicians have become millionaires. The God father of this act is MR.

    So Unacceptable the Way Loans are Managed Tuesday, 09 April 2024 09:27 AM

    What kind of system are the banks running? How can such loans be approved without any collateral guarantees? Can an average person with no contacts take such loans? This is so unacceptable and the people who are defaulting the payments are disgusting. It’s basically steeling in a more professional way!

    K.L.L. Fernando Sunday, 21 April 2024 09:55 PM

    What is there to talk. When all these people are dead silent when cabinet used PARATE to save Nawaloka who have spindled money and showing loss. Loan of Rs.600 million and total goes up to Rs. 1.0 Billion. See how many times times Nawaloka was suspended by the CSE. Now they don't have to bother about payment. Parate stoppage was not meant not for large businessmen like Nawaloka who had earned massive amount from the poor people in this country during PANDEMIC. Suspensions was only meant for the genuine SME businessmen who really got affected due to pandemic and subsequent disaster. While doing these things Rajapaksa took over the largest privet hospital APPOLO bought by Harry from Indians and Harry who has made immense contribution for the country. But the only curse was that he was Christian. If these rulers have these types of attitude where will this country will end up. .

    Cherath Monday, 22 April 2024 03:30 PM

    What else could one expect at a breakneck speed race on a dirt track which is devoid of traction and safety barriers, especially at bends. Just because you found a stretch of a road winding it's way kms down the line, you cannot erect advertising boards and call for the race to begin. Did it receive the approval of the safety standards bureau and he relevant sports body? I doubt it. It's another tragedy waiting to happen. Hope they take on board the costly lesson in common sense. Sympathies to the innocent victims.

    Smh Friday, 10 May 2024 10:21 PM

    Being a head of a government institution is very hard due to meddling and special favors that mininsters demand. Not that SMIB is blameless either. They are the most inept when it comes to getting a loan and the uncaring attitude of the staff is reprehensible. So, contrary to what GM says to pacify these bratty staff, they should take some of the blame for the losses. Hence, you did not earn a bonus or my sympathy because laziness should not be rewarded.

    A.R.M.Cassim Monday, 13 May 2024 06:32 PM

    For these losses part of some employees and senior management is responsible. No end to corruption. I have made many complaints. However it was ignored by even former chairman/ General Manager of the bank. Specially procurement of basic things like Computer Stationary etc.


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