Foreign reserves comfortable, no cause for alarm, says CB Governor
CB Deputy Governor P.Samarasiri, Governor Arjuna Mahendran and Deputy Governor Nandalal Weerasinghe at the briefing.
Foreign reserves are in a comfortable position and there is no cause for alarm while dormant bank accounts in Sri Lankan banks will be transferred to the Central Bank only after 10 years and not one year as reported in a local newspaper, Central Bank Governor Arjuna Mahendran said on Thursday.Briefing journalists in Colombo, he said he had spoken to the Minister of Finance on the issue of inactive accounts and underlined the normal procedure that if monies have been lying dormant in an account for 10 years then such monies are traditionally transferred to the Central Bank until such time till the valid owner comes forward to claim it even after 30 years.
We take steps to freeze such monies until the owner claims it. This was the standard procedure. However the Minister also suggested that such monies could also be transferred to the Consolidated Fund. The monies that are in the Central Bank are used to buy Treasury Bills. When such monies are returned the depositor will be paid with interest from the bank,” he said.Referring to foreign reserves, Mr. Mahendran said that the Bank had comfortable foreign reserves and the country was not in need of an emergency loan facility at the moment. “There is absolutely no cause of alarm. We want foreign investors to know that Sri Lanka was on a stable path with internationally accepted principles.
That reassurance was made by the Prime Minter when addressed the parliament recently. We are currently talking to the IMF and the World Bank on re-financing swaps on concessionary terms. It is not that we don’t have money,” he said.The Governor said Sri Lankan interest rates were high and it is not prudent to raise it at this juncture as it would be detrimental to businesses. “Let’s wait and see what the Federal Reserve does in the future.” Asked what would be the impact of global investor and philanthropist George Sores visiting the country next week, the Governor said his visit would boost investor confidence in the country.
He said the world economy was slowing down and according to IMF projects the global economy for 2016 was bleak. “Tea and rubber prices have been affected and even the Chinese imports are slowing down because their banks are lending less money than before. That has an effect on Sri Lanka as we are a part of the global economy. However we are able to grow more than 5 per cent is a resilience of our economy.” He said more economic zones will have to be set up to attract more foreign direct investment (FDI) to the country. “It will be easier for foreign investors to set up businesses in this zone. We have not built special economic zones in the country for many decades.”
Deputy Governor of the Central Bank Dr. P.N. Weerasinghe said that growth projections for 2016 will be around over 5 per cent owing to a reduction in growth potential. However measures have been taken to strengthen the economy. Deputy Governor P. Samarasiri, explaining the nitty-gritty of dormant accounts, said there is about Rs.3.2 billion lying in these accounts.“Dormant accounts are non-operating accounts which a customer cannot withdraw without the approval of the bank. This is done to protect the customer’s interest.
However abandoned property comes under the Banking Act. Such are accounts that lie in the bank for more than 10 years unaccounted. In such instances the Central Bank can issue directives to the banks concerned to deal with such monies. 90 per cent of such monies will have to be transferred to the Central Bank while the bank retains 10 per cent of it. However the Finance Minister can issue instructions as in the past to transfer such monies to the Consolidated Fund. But when a person claims such money the Central Bank will pay back with interest all his money,” he said.