A Shot in the Arm

People’s Bank got Rs. 2 billion cash injection from the government last week. People’s Bank got Rs. 2 billion cash injection from the government last week. It was the start of the bank’s third recapitalization exercise and the first time it had a cash injection.

On previous two occasions the government put non-tradable bonds to strengthen the balance sheet.

The Asian Development Bank (ADB) agreed to pump in up to Rs. 6 billion or US$ 60 million to the government to be given to People’s Bank as a cash injection if it met performance criteria agreed to in the “Financial markets program for private sector development” loan signed a year ago.

The same loan also supports some areas for capital market development but its main aim is the recapitalization of People’s Bank.

People’s Bank General Manager Asoka de Silva told LBR that government gave the cash in the last week of December as part of the agreement with the ADB.

The bank is due to get Rs. 2 billion every year according to the loan agreement.

Government only releases the money to the People’s Bank