Probe on People’s Bank GM’s increment package
The Government has rejected the extension of service of the General Manager (GM) of the People’s Bank and was probing his annual salary package, amidst reports of mismanagement and mounting, bad loans at this state institution.
The Ministry of Finance and the Ministry of Public Enterprise had accepted the recommendation of the Committee on Public Enterprises (COPE) not to extend the contract service of People’s Bank GM N. Vasantha Kumara who is currently drawing a monthly salary of Rs.2.1 million, COPE Chairman, and MP Sunil Handunnetti told the Business Times.
The two ministries have informed this decision in writing to COPE following revelations that an overdue increment with arrears of Rs.75 million was paid to the People’s Bank GM and former Senior DGM, he said adding that this payment has been made as per a board paper presented to the board of directors of the bank by the GM himself.
This was one of the rare occasions where the government has taken prompt action responding to a COPE recommendation, he pointed out.
Meanwhile a top official of the Ministry of Public Enterprise disclosed that the bank has been directed to improve its credit quality and enhance recovery mechanisms in the wake of startling revelations by the COPE on mismanagement and bad loans.
The bank has issued loans amounting to Rs. 38,000 million in 2017. Out of this amount, Rs. 3,607 million (9 per cent) has been identified as non-performing loans by 31 May 2018, COPE Chairman and MP Handunnetti divulged
“Out of this, the bank has failed to obtain a single installment from loans amounting to Rs. 140 million,” he said adding that this default in repayments was a never ending process in the bank.
COPE has also directed the management of the bank to provide details on its recent digitisation project where there was an additional expense payment of Rs. 84 million.
“We have asked for further details on that as the bank authorities informed COPE that the money was spent for foreign trainers who carried out familiarisation of digitisation,” he said.
The required process to become the first digitised bank started in June 2015 aimed at creating a total solution using the current core banking platform, a senior official of the bank said.
Loan portfolios of the bank depend on the exposure to the Government including State-owned Enterprises (SOEs) which hinder the ability to extend loan facilities to new developing sectors of the economy and diversification of the product portfolio, he pointed out.
According to Treasury data, loans and advances increased by 7.8 per cent in January-April 2018 to Rs. 1,158 billion. The bank recorded a profit before tax of Rs. 7.8 billion for the first four months of 2018 in comparison to Rs. 4.6 billion witnessed in the corresponding period of 2017.