Sunday Dec 22, 2024
Sunday Dec 22, 2024
Wednesday, 13 March 2024 00:00 - - {{hitsCtrl.values.hits}}
Cabinet Co-Spokesman and Minister Bandula Gunawardena
By Charumini de Silva
The Cabinet of Ministers on Monday approved publishing the Bill to introduce amendments to Recovery of Loans by Banks (Special Provisions) Act No.4 of 1990 in the Government Gazette and to table it in the Parliament for approval. The move follows last month’s Cabinet decision to suspend the parate law enforcement used as collateral for loans till 15 December 2024.
“The diligent efforts of the draftsman culminated in the completion of the amended Bill, which has now received clearance from the Attorney General,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said.
Speaking to journalists at the post-Cabinet meeting media briefing yesterday he noted that a Cabinet decision alone is insufficient to prevent parate law enforcement, as banks operate according to the legislation passed by Parliament.
Therefore, only an amendment to the existing law can address the issue.
“Given this legal background, the Central Bank can only request the banks under the civil effect system to suspend auctioning of the properties till the Act is amended,” he said, highlighting that only an amendment to the law can be considered.
Regarding concerns about the temporary suspension of the parate law favouring large-scale companies over Micro, Small, and Medium Enterprises (MSMEs), Gunawardena underscored the legislation’s role in ensuring financial system stability.
He explained that banks lend money deposited by customers, and any instability in the banking system could adversely affect depositors and the overall economy.
“The Government is working to strike a balance, safeguarding both the banking system and debtors,” Gunawardena assured.
He noted that the decision to suspend parate law enforcement till 15 December was made after considering appeals from various stakeholders, including the media.
However, the Cabinet Co-Spokesman clarified that the suspension would not apply to Court orders for auctioning properties, as these cases were initiated before the Cabinet decision made last week.
The MSME Chamber of Sri Lanka has welcomed the temporary suspension (see https://www.ft.lk/top-story/MSMEs-hail-temporary-suspension-of-parate-law/26-759004) whilst Sri Lanka Banks Association has condemned it (see https://www.ft.lk/front-page/Banks-say-alarmed-by-suspension-of-parate-process-at-behest-of-a-few-individual-defaulters/44-759388).
Last week Opposition leader Sajith Premadasa in Parliament renewed his call for the Government to direct the Central Bank to issue a circular to enforce the suspension of the parate law and prevent property auction. (see https://www.ft.lk/top-story/Sajith-charges-banks-disregarding-Govt-s-parate-suspension-move/26-759270).
