4.5 bn loan package. The Asian Development Bank stepped in on Monday to bail out debt riddled Peoples’ Bank, with a Rs. 4.5 bn loan package. “We will get Rs 2.0 bn in the last quarter of 2005, Rs 1.0 bn in 2006 and another Rs 1.5 bn in 2007,” said CEO People’s Bank, Asoka de Silva, at the signing of the loan agreement on Monday.
This is the third time the much abused State bank, has been recapitalised, but this time round the ADB has tied the three year funding programme to the banks performance.
The performance benchmarks include reaching capital adequacy by 2007 and bringing down bad loans to 12 percent from the current 15 percent.
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At the moment the bank’s non-performing loan portfolio comes to around Rs 20 bn and the banks needs something like Rs 8.5 bn to meet the minimum capital adequacy requirement.
The ADB funding alone cannot cover up all these past sins but People’s Bank says its current performance momentum will see it through by the end of the three years.
“The banks profits will add to th