Sri Lanka’s state owned Lankaputhra bank in trouble due to unpaid loans


May 11, 2015 (LBO) – Sri Lanka’s state owned Lankaputhra bank is going through a hard time due to non-performing loans given on the instruction of the Rajapakse regime, the Bank’s Chief told reporters at a press briefing held Colombo.

Lankaputhra started operations in 2006 with an aim to finance and uplift small and medium enterprises.

“After we undertook the management, we saw that a huge amount of loans has been given to a selected people without proper collateral,” new chairman of the Lankaputhra Development Bank, Lasantha Gunawardena said at a media conference held at Colombo.

“Some of those loans have been converted to bad debt,”

“Up to now, about 1,600 million rupees are there to be collected which were given under the instructions of the former government,”

“When we started the process of collecting these monies, we have come to understand that the money has been given without proper collateral.”

Gunawardena said about five million rupees has been given under a direction issued by the officials in the last regimes treasury, for some semi precious stones which were estimated at 1.4 million rupees by the Gems and Jewelry Authority.

These irregularities were found out during the ongoing credit audit investigation of the bank and the money has not been paid back, he said.

“We opened their safe box and found out the stones are fake. We have no way of collecting that money, We had lodged a complaint with Police Financial Crimes Investigation Division.”

Another loan of more than 30 million rupees has been given with a deed of a temple as security.

“When we go to that temple to negotiate and collect the money, a Buddhist priest told us that this loan has been given without his permission.”

Gunawardena also said, that a loan of 75 million rupees has been given to a political ally in Trincomalee to manufacture boats.

“There was no proper procedure followed in the loan and few boats have only been manufactured, those boats have been used for human smuggling.”

Another businessman has been given a loan of 330 million rupees with no proper inquiry, Gunawardena told reporters without naming the person.

“The bank has refused to give the loan initially but he has wrote to the former President asking to provide the facility to get the loan. Then the presidential secretariat had send a letter to our bank directing to pay special attention in giving this loan,”

Another loan of 4.6 million of rupees has been taken from Lankaputhra Hambantota branch submitting fake information using signatures of 10 security personnel.

Gunawardena said, a person has used a 30 year state owned lease land as a security while about 200 million rupees has been given to a company according to a direction by the former government’s Finance Ministry secretary.