Total non-performing loans of all banks reach Rs 1.4 trillion

Banks and depositors will be saved anyhow: State Minister of Finance  

• New laws to prevent forcible seizing of leased assets 

By Yohan Perera and Ajith Siriwardana 

While revealing that the total value of non-performing  loans of all 30 banks functioning in Sri Lanka  currently is Rs 1.4 trillion, the State Minister of Finance Ranjith Siyambalapitiya  yesterday assured that steps would safeguard the economy.  

“It is the banks which safeguard the country’s economy.  More than 60 per cent of the total deposits in banks in Sri Lanka are  less than Rs 5,000. Most of the deposits in banks are held by the poor  people of the country. Therefore, the government will always safeguard  them.” the State Minister told Parliament.  

“Banks have recovered only a total of Rs 17 billion through  Parate Execution during the past few years. Parate execution right is  the rights given to banks to recover non-performing loans by auctioning  assets which the borrowers had kept as collateral when obtaining loans.  Banks have the legal rights to perform Parate execution to recover  loans more than Rs 5 million,” the State Minister said.  

“There are also particular procedures which the leasing  companies should follow when seizing assets which are given on loans.  They are legally bound to inform the OIC of the Police Stations in the  areas where the person who had leased an asset resides. The lender has  to accompany the police when he goes to recover the assets. Also, an  asset could be seized only with the consent of the person who had  obtained a lease. We will bring in amendments to leasing laws soon,” he  added.