Amunugama lists reasons in P’ment for Lankaputhra Bank failure

Thursday, 23 May 2013 00:17 - - {{hitsCtrl.values.hits}}

By Ashwin Hemmathagama

Our Lobby Correspondent

Lankaputhra Development Bank Ltd. (LDBL) failed due to “some reasons” including the “decisions taken by past Chairmen” who took imprudent decisions to “offer credit lines to different industries, which were not mandated by the bank” and most importantly by “omitting due diligence,” accepted Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama in Parliament on Tuesday.

“This bank was set up by me as the Finance Minister with the specific objective of building a bank for small and medium scale enterprises. We expected it to be a special bank. In Sri Lanka, most of the banks including People’s Bank were started with different intensions. However, for certain reasons including the people who held positions as Chairmen have granted large loans excluding the sector we have aimed.

“I also agree to the fact that these loans were provided without having due diligence, hence non-performing loans have increased. These are the real facts that we all should agree on, keeping aside party politics. These are national institutions and we all should feel sorry and there nothing to hide,” confirmed Minister Amunugama in response to a question for oral answers raised by UNP MP Ravi Karunanayake.

Having gone through the accounts tabled at the Parliament, Karunanayake slammed the past performance. “Return on assets has declined and reserves have gone up. This is not possible where there should be an error. The provisioning for the bad debt is high. Auditors have qualified this saying that 88% of debt is non-recoverable from this bank, which was started for development purposes. Now it has ended up by giving Rs. 50 million for a shoemaking factory, an institution which is not development-oriented. D.E.W. Gunasekara has stated that both State banks – People’s Bank and Bank of Ceylon – are bankrupt. Adding more to it, the Lankaputhra Development Bank is also on the verge of bankruptcy,” said MP Karunanayake.