CB claims political culture was a major obstacle in implementing regulations

By Charumini de Silva

The Central Bank on Tuesday claimed that the country’s political culture has been one of the major stumbling blocks in enforcing regulations against troubled finance companies.

“Often in this country the delays are caused by political factors interfering into the workings of institutions. Here again that has happened in the past and now we have to make sure it doesn’t happen in the future,” Central Bank Governor Indrajit Coomaraswamy told journalists responding to questions on why no action had been taken in the past.

Addressing a special media briefing on ETI Finance (ETFI) and Swarnamahal Financial Services Plc (SFSP) that have run into a liquidity crisis at present, he said although the Central Bank had issued directions on these companies since 2012, no stern actions had been takendue to political pressure.

“The Central Bank tried to improve the situation through directions and the directions were violated on a regular basis. There was serious mismanagement of this company. Being an asset-rich company, there is no reason why they got into this situation. This is one of the reasons why it did not turnaround. Now we have taken it into our own hands,” he added.

Dr.Coomaraswamy said the Central Bank had been criticised for its regulatory performance on many occasions under the good governance administration as well.

“We have been criticised for our regulatory performance at the Cabinet Committee on Economic Management and so on. But we have made a point that the main problem was politics, not Central Bank regulations. In response to that we were told that politics would not be a problem anymore and we should go ahead and do our work,” he stressed.

He said that the culture is now changing, due to lack of regulatory restraints stemming from the political interferences. “Over the last 4 to 5 months, we have lacked political interferences.”