Who is responsible for destroying state banks?

State banks, according to their annual reports, are obtaining a healthy profit and running smoothly without giving any burden to the Treasury. They credit their profit to the government’s consolidated fund annually while providing necessary financial assistances to the development of the country.

However, former Finance Minister Dr. Sarath Amunugama is reported to have said at a function held at Kundasale that some state owned enterprises in which he included the Ceylon Electricity Board, Railways, Ports Authority, Petroleum Corporation and state banks are gobbling up state funds because of their inefficient management.

The former minister has repeatedly slammed state banks for mismanagement even when he was the Finance Minister.

It is true the Bank of Ceylon and People’s Bank have been provided fresh capital through government bonds in order to bring them into international standards. This happened when Mr. D. B. Wijetunge was president of the country.

We don’t need to remind our former Finance Minister about the billions of non-performing advances of the two state banks which appear to have been granted by the bank authorities due to political influence.

I am unable to understand why our politicians who are notorious for corruption, bribery and misuse of power put the blame on the management of the banks when state institutions have fallen into this present situation due to their own fault. Sometimes officials of state-owned enterprises have to follow the instructions of the Chairman or secretaries of the ministers who are appointed by the President or Ministers. This has been continuing since 1972. On the other hand state banks have to follow government polices and instructions while doing banking within the highly competitive banking environment.

It was recently reported that the Central Bank is going to impose a one percent general provisioning on performing loans. If this one percent provision is implemented the fate of the state banks will worsen. We should not forget that every government coming to power had wanted to privatize the state banks saying they are running at a loss. I think that the new moves by the Central Bank would help to privatize state banks. The Ceylon Bank Employee’ Union should be alert because what is happening is not good for state banks.