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Sinful bankers and golden handshakes The banking
industry will soon forget the Pramuka Bank saga, till another banking
scandal breaks out. The Central Bank and commercial banks spend
millions on training. This is a waste of money as the industry is
run on a trial and error basis. Nobody seems to believe that prevention
is better than cure. So far the mistakes have been very costly for
customers. Banks have
different kinds of deposits such as current deposits, savings deposits
and fixed deposits. A prudent banker will always ensure that their
deposits in current accounts are advanced or invested in the short-term
market, since the funds in current accounts could be withdrawn without
notice. Money in saving
accounts in Sri Lanka could be withdrawn once a week. Therefore
any bank lending funds in savings accounts for over seven days runs
the risk of not being able to return the money when demanded by
the customers. Similarly, money in fixed deposits should be invested
in assets to match the maturity pattern of such deposits. In Sri Lanka,
banks have assets maturing over ten to 20 years periods, whereas
99 percent of their liabilities mature in less than five years.
Foreign banks
are not in this category as they are guided by the instructions
from the head offices and are expected strictly to match their assets
and liabilities. Also they come under the supervision of the monetary
authority of their own country. It is high time the Central Bank
stepped in to ensure that our commercial banks match their assets
and liabilities. Customers should
be careful in picking banks to entrust their savings and would do
well to invest in Treasury Bills or bonds with government guarantees
or seek guarantees from banks the way the banks do when they lend
money to us or demand deposit insurance. It is said that doctors
bury their sins. We only know that sinful bankers get a golden handshake
and join another bank. A.G.
Weerasinghe SEC
and the AG's It is quite
clear to me that the AG's ruling is based on piffle. In corporate
business a person's reputation and record counts for more than just
a heap of paper. I have myself
been through such an experience where false banner headlines have
influenced and prejudiced people more than facts and the accused
defence. In short the judgement of experienced businessmen is clearly more likely accurate than legal observations which do discount character and record over all other issues. Munsoor
I. Jafferjee, Development
banks have The involvement
of lending agencies such as the World Bank in the administration
and disbursement of the massive development loans that would be
made available shortly for reconstruction and rehabilitation of
war-damaged areas in the north-east is an insult to the two main
development lenders of this country. DFCC and NDB
were set up with the aim of assisting the development activities
of both the public and private sectors. They were set up under special
Acts of Parliament to play a pivotal role in channelling development
assistance and handling their disbursement. With the government
giving up its majority stake in these two banks, they have forgotten
their original purpose, lost their development focus and diversified
into commercial banking. Their experiments
with commercial banking have not been successful, resulting in precious
capital being wasted on mergers and acquisitions which have nothing
to do with their original aims. Wrong use of
capital in this manner has compromised their financial stability
to the extent that some of these institutions have been recently
precluded from taking part in lending actives of the World Bank
and ADB. It is strange
these institutions, which are still recognised by statutes of parliament,
have been allowed to direct or even 'misdirect' precious capital
towards non-related activities, thereby reducing their development
lending capacity. The only way
DFCC and NDB seem to be trying to restore their capital is by going
after hapless borrowers, evident from the large number of "Parate
Notices" appearing in the newspapers. NDB and DFCC
should restore their original objectives, where they are more interested
in the development of the country, and not in improving the egos
of their bosses who are bent on building financial conglomerates.
Had this been done there would have been no need for the World Bank to come in as administrator of loans to rebuild the north-east. Cleatus
Jayawardena, Authorities, opposition silent about shortcomings Laws are enacted;
rules and regulations are framed in this country, but for whose
benefit? The mass media have often spotlighted these shortcomings. A glaring case
is the causes that led to the suspension of Pramuka Bank. It was barely
a month before the suspension of Pramuka that the Central Bank published
a notice in the newspapers warning people against investments in
financial institutions not licensed by the Central Bank. Pramuke was
in the "safe" list. This undoubtedly convinced people
they might continue their investment in it. Among Pramuka
customers are pensioners who survive on the interest from their
hard-earned savings, parents who have deposited funds for their
childrens future and the young planning their future. This situation
has led some of them to near suicide. The depositors
have petitioned the President and the Prime Minister. There has
been no response whatsoever. The Finance Minister is also silent
on the pleas of depositors. The Deputy
Finance Minister has insinuated that if the depositors were attracted
by high interest rates it is their funeral (Pramuka interest rates
were not high when compared to rates offered by other banks at the
same time). The Opposition
too is silent. It is most disheartening that all those who are responsible for the welfare of the citizens of this country have not an iota of sympathy for the suffering masses. Politicians
of all hues take to the street at the drop of a hat, supposedly
for redress on behalf of the public. In this instance
there is deafening silence. Why? This is nothing but bad governance.
The populace
will certainly give their verdict at the next elections.
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