COPE directs People’s Bank to submit full report on non-performing loans to the tune of Rs. 54 b

• Report sought within month with details on recipients of loans, how the approvals were given
• Details to be made public in next Committee report to be submitted to Parliament
• COPE finds car used by former GM of bank valued at over Rs. 16 m transferred to him for Rs. 113,698

Committee on Public Enterprises (COPE) Chairman Charitha Herath directed People’s Bank Chairman Sujeewa Rajapakse to submit a full report within a month giving details of private companies which were granted loans to the tune of Rs. 54 billion that are currently listed as non-performing loans.

COPE said the report should include details on how the loans were evaluated and the persons involved in giving such approval saying that this information will be made public in the next report of the Committee.

Officials of People’s Bank appeared before the Committee when the Auditor General’s reports for the financial years 2018 and 2019 and its current performance were taken up for appraisal.

The Committee observed that in instances where small and medium enterprises (SMEs) owners wanted loans, rigorous methods were put in place but when it came to large loans running into over a billion rupees, they were approved swiftly.

The Committee members questioned what methodology was used to grant such massive loans when they did not have the ability to repay or property for mortgage.

The Committee also found that companies owned by members of the Board of Directors were given loans and the loans have been transferred to the non-performing loan category. As at 31 December 2019, the total loan amount due was Rs. 4.2 billion. People’s Bank officials said that an investigation has been launched through the CID in this regard.

The Members also pointed out that in the future when loans are given, it should be done in a more systematic manner with a sense of responsibility when handling national wealth.

The committee also discussed the handing over of a used vehicle to a former General Manager of People’s Bank at a very low estimate when he retired in 2019. It was revealed that this car which was purchased for Rs. 16.6 million on 27 April 2015 has been transferred to the former General Manager in 2019 at an estimation of Rs. 113,698.

People’s Bank General Manager Ranjith Kodituwakku said that handing over of a vehicle that has been used by the General Manager for more than a year is usually the practice and in terms of market value considering depreciation over the time used the said transfer had been done.

The committee inquired how a vehicle purchased for approximately Rs. 16 million was estimated to be worth Rs. 113,698 when transferring. The General Manager said that the bank’s policy of handing over vehicles has been changed and now, it has been decided to give this opportunity only to those who have held the post of General Manager or Deputy General Manager for more than 25 years.

The COPE Chairman pointed out that such practices were taking place with the permission of the Board of Directors but urged the Secretary to the Ministry of Finance to intervene immediately regarding the situation.

Accordingly, he recommended that guidelines be prepared for such activities which are carried out only with the permission of the Board of Directors for the banking system under the Secretary and necessary action be taken in the future. 

Minister Nalaka Godahewa, State Minister Indika Anuruddha, MPs Mahinda Amaraweera, Jagath Pushpakumara, Rohitha Abey-gunawardena, Patali Champika Ranawaka, Harsha de Silva, Sarath Weerasekera, Eran Wickramaratne, Jayantha Samaraweera, S.M. Marikkar, Shanakiya Rasamanickam, Madhura Withanage, Premnath C. Dolawatte and Auditor General W.P.C. Wickramaratne, Ministry of Finance Secretary Mahinda Siriwardana, and officials of People’s Bank were present at this meeting.