Private banks await CB input to help pay CPC bill
The Central Bank (CB) still hasn’t responded to the private commercial banks’ committing specified amounts to help the Treasury foot the Ceylon Petroleum Corporation’s (CPC) oil bills, officials said.
The CB on January 20 opted to spread the financing of fuel purchases among licensed banks in ratio to their foreign exchange inflows and requested all private banks to produce US$ 250 million to help state banks to pay the CPC fuel costs. “We have had a discussion with the bankers, and we have reached agreements where they will also take part in the essential items so that we do not provide that only to the two state banks. All will take part in it so that the essentials are hereafter given priority. After that, the others can be imported,” the Central Bank Governor Ajith Nivard Cabraal said at that time.
The CB met with all the banks to discuss this and subsequently had one-on-one discussions with them, bankers said. At the initial discussion, banks had said that it will be difficult for them to fund such a large amount and laid out their limitations. The CB had then urged them to give priority to fuel bills. The delays in securing the required diesel and furnace oil from the CPC pushed the Ceylon Electricity Board to shut down several thermal power plants leading to power cuts in January.
“The CB pointed out that without power the industries will come to a grinding halt. We cannot afford these bills but in the national interest we agreed to commit to certain amounts,” a senior banker told the Business Times on Monday. Another banker confirmed this saying that when the banks pointed out they are under pressure and can only commit to certain amounts the regulator agreed to fall in line with that.
“We went back to them with what we can afford. The CB hasn’t come back to us with the final decision.” As per sources close to these discussions the reason for the regulator being noncommittal so far on the proposals by these banks was because the commitments in total had not added up to $100 million.” We are still awaiting some feedback from them,” a third banker told the Business Times.
He further noted the CB is keen that banks do not support non-essential imports.
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