June 22, 2006 (LBO) – Sri Lanka will merge several state-owned banks catering to small medium sector enterprises into one larger bank, a top government official said. Economists say Sri Lanka’s post-independent economic history is littered with ill- considered government policy decisions that ultimately backfire on the very persons they are intended to help.
updated The government set up two banks; SME Bank, and Lanka Puthra Bank to keep election promises made in two successive budgets in a bid to win over small and medium sector business.
But neither the SME Bank nor the Lanka Puthra Bank – which is still to begin active operations – have been able to make an impact as they do not have a branch network to reach rural areas.
“We want to merge these banks and the Regional Rural Development Banks into one unit and make a single large development bank,” Treasury Secretary P B Jayasundera told reporters.
The regional rural development banks were set up with equity infusion from the Central Bank of Sri Lanka as part of a rural credit drive, but the banks have since been handed over to the treasury.
The banks have a wide-rang