Wednesday, 22 October 2014 00:00
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New bill passed to facilitate Budget 2014 proposal, insists move will avoid market volatility
By Ashwin Hemmathagama Our Lobby Correspondent
Paving the way for the proposed merger of DFCC Bank, DFCC Vardhana Bank and NDB Bank, the Repeal and Consequential Provisions Bill was passed in Parliament yesterday
Moving the bill that delivered the provisions for the registering of DFCC Bank as a public limited company with the name DFCC Bank PLC and to provide for the provisions consequential to such registration by repealing the DFCC Bank Act Chapter 165, Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama found the consolidation of the finance sector a “must to avoid market volatility”.
According to Minister Dr. Amunugama, the merger of the three financial institutions will “establish a firm asset base and steady source of funds,” essential for the “development program of both the private and the State sectors”.
He went on to point out: “The merger was announced in Budget 2014. There are 22 local banks and 12 foreign banks operating Sri Lanka. The total value of the banking sector comes to Rs. 6.3 trillion, where five of the local banks enjoy an asset base exceeding Rs. 500 billion; so all the other banks are depending on these five banks to do their key transactions. Small banks lack stability. We want to establish the stability by going ahead with the financial sector consolidation.”
Joining the debate, UNP MP Dr. Harsha de Silva announced the Opposition’s disapproval and demanded the Government discontinue the merging of DFCC Varadhana Bank, DFCC Bank and NDB Bank as planned.
Pointing out the issues with interest rates prevailing in the country and the limited access to funds, Dr. de Silva charged: “The income of an average household stood at Rs. 26,000 based on a survey conducted by the Government in 2007. Three years after the it has increased to Rs. 45,000, which is a nominal growth. If you analyse the private sector, credit growth has declined drastically. Today it is at 0.8%, which is not healthy at all. What is required is to encourage private sector participation in development rather than borrowing at high rates from China.”
