People’s Bank privatization rumour is baseless & politically motivated: Finance Ministry

Sep 03, 2019 (LBO) – Sri Lanka’s Government emphasizes that the proposed amendments to the People’s Bank Act never aims to privatize People’s Bank.

According to the Finance Ministry, the only objectives are to increase the authorized share capital of the People’s Bank and to enable the Bank to issue debentures without the additional requirement of obtaining a treasury guarantee.

As per the section 13 of People’s Bank Act 29 of 1961, the ultimate ownership of People’s Bank vests with the government of Sri Lanka.

Its responsibility lies on the Secretary to the General Treasury. People’s Bank Act clearly states that People’s Bank shares cannot be sold to any party other than cooperative societies or Secretary to the General Treasury.

The government, however, emphasizes that section 13 has not been included in the proposed amendment bill let alone amend it and proposed amendments only seek to amend section 12, 20, 21 and 43 of People’s Bank Act.

Objectives of amending these four sections are: increasing the authorized share capital from Rs. 1 billion to 50 billion and enabling People’s Bank to issue debentures without the additional requirement of obtaining a treasury guarantee.

All other states banks issue debentures without being backed by a treasury guarantee.

According to the Parliamentary Acts which established Bank of Ceylon and other state banks, there is a mechanism as well as permission for these state banks to issue debentures to fulfill their regulatory requirements.

The Finance Ministry, however, states that no one is leveling privatization allegations against these banks.

The government reiterates that after the People’s Bank Act has been amended, there is no opportunity whatsoever to convert issued debentures to share capital because section 13 of People’s Bank Act does not permit such conversions.

People’s Bank Act amendment process started in 2013.

The Finance Ministry says various statements made to the effect that People’s Bank Act amendment Bill aims to privatize the Bank, are none other than the politically Motivated baseless assumptions made by certain political leaders who attempt to mislead the public for their own personal gain at this juncture.