News
Central Bank plans structural reforms
The Central Bank is planning far reaching structural reforms to strengthen and streamline legal tender, risk management, supervision of banks and financial institutions, and management of an international reserve, utilising its nearly 1,500 staff.
A Legal and Compliance Department was re-established this week to advise the bank on legal issues and to represent it in courts and other legal forums.
The CB had paid as much as Rs. 480 million as lawyers’ fees in respect of the transaction referred to the international arbitration panels on behalf of the CPC in 2012-2013. The CB paid Rs. 135 million without Cabinet approval to Sir Desmond de Silva QC; Sir Geoffrey Nice QC and Rodney Dickson QC — all three from the UK- and — David M. Crane from the US. They were appointed by former president Mahinda Rajapaksa in 2014, as advisors for a domestic inquiry into the loss of civilian life during the ‘Eelam’ War, these sources revealed.
Source said the CB would diversify the Employees Provident Fund (EPF) to maximise returns in the projected future low interest rate environment. Investments in foreign currency denominated instruments and increased participation in secondary market activities have been proposed as diversification strategies, according to these sources.
With a current asset base of Rs. 1.3 trillion, the EPF owns shares up to the maximum limit of 10% of the issued share capital of major banks and a significant portion of the shares issued by other non-bank institutions. These shares were acquired for the EPF by the CB’s Monetary Board, as the custodian of the EPF funds.
Of all EPF investments, little over 6% of the total fund is invested in 119 companies at CSE, in a mix of voting and non-voting shares. Unfortunately, most of these companies are running at a loss or exposed to price manipulations leading to a capital loss. Piramal Glass Ceylon PLC, Galadari Hotels (Lanka) PLC, Laugfs Gas PLC, Ceylon Grain Elevators PLC, Dipped Products, Lanka Indian Oil Company and Browns and Company PLC are some of these companies.