No System Risk

Officials say the collapse of Pramuka Bank will not pose a systemic risk to the financial sector, as most commercial banks did not have links with the failed bank.
Finance Minister K. N. Choksy told LBR on Tuesday (17 Dec.) that the financial system could withstand the effects of Pramuka Banks liquidation.rn

rnAs Pramuka was the first regulated bank allowed to fall, analysts say savers will now rethink their attitude towards bank deposits. But the massive and systematic accounting frauds in the bank have raised questions about the reliability of published financial information in the country.rn

rnThe Pramuka collapse is already pushing the smaller banks to seek additional capital to boost their negative net worth. Market speculation is high that Union Bank is trying to hammer out a deal with Sampath and NSB to bring its capital up to scratch.rn

rnOther smaller banks are also expected to come with financing plans sooner rather than later because the Pramuka failure has suddenly increased the urgen