Mar 25, 2008 (LBO) – Sri Lanka is wrapping up plans to merge six state-run regional development banks and a draft bill to give legal effect to the merger would be ready by June this year, a finance ministry official said. Ruhunu, Rajarata, Sabaragamuwa, Kandurata, Uva and Wayamba development banks are now run as autonomous banks with their own boards of directors, and operate in specified provinces.
Under the new structure an executive director would be put in charge of each region and three banking professionals would be put on the main board, a senior finance ministry official said.
Ceylon Bank Employees Union chief M R Shah says the merger has the support of the workers.
The new bank is expected to be capitalized at 2.8 billion rupees. The government revealed plans to merge the banks in its 2007 budget.
At the same time the government also proposed the merger of SME Bank and Lanka Puthra Bank, which were created after 2004 to give effect to election promises and ended up with massive bad loans shortly after starting up due to politically directed lending.
Critics say the two banks have been favourite targets of politically powerful black listed defaulters.
An earlier plan to merge the two