Public Enterprises Ministry probes Rs. 1 bln BoC bad debt
The Ministry of Public Enterprises has ordered a probe into an alleged Rs. 1 billion bad debt at the Bank of Ceylon (BoC) and also requested the Criminal Investigation Department (CID) to carry out an investigation, ministry sources added. The BoC comes under the ministry
They said that BoC’s Credit Committee is also under fire and that an Assistant General Manager (AGM) has been sent on leave. They said that the Credit Committee at BoC has said that they didn’t receive adequate information by the said AGM on the vehicle importer to whom this credit was extended to. “But this is a collective responsibility and we’re giving full cooperation to the CID on this matter,” a ministry source told the Business Times. The Rs. 1 billion is said to be below the credit limit that surpasses the need for collateral, according to the source. Kabir Hashim, Minister of Public Enterprises Development is said to be unhappy with the turn of events and the fact that he wasn’t alerted on this issue. It had come to his notice after the Business Times had highlighted the problem last Sunday. “He said that strict action will be dished out and all necessary cooperation extended to the authorities,” the source added.
The ministry source said that a small commercial bank has also been affected by the same importer operating in Kaduwela area upto Rs. 150 million while a myriad of finance companies is also facing bad debts and payments by this dealer.
Analysts said that operating conditions for Sri Lanka’s banks have weakened because of the high loan growth over the last two years, driven by a loosening of underwriting standards.