Opposition complains to regulator, People’s Bank chief says followed procedure
ECONOMYNEXT – The main opposition Samagi Jana Balavegaya (SJB) has lodged a complaint against the head of People’s Bank for granting a loan to a firm he is a partner in, but Chairman Sujeewa Rajapakshe says he followed the ethical process required for such an approval.
In a complaint to the Central Bank of Sri Lanka (CBSL), SJB Member of Parliament Mayantha Dissanayake said that a Working Capital loan of LKR23mn had been approved for BDO Partners, of which firm Rajapakshe is a managing partner.
Dissanayake in his complaint, according to a press release issued by SJB, alleges that the loan was granted in violation of the Banking Act.
The relevant portion of the Act reads “a licensed commercial bank shall not grant any accommodation to a concern in which any director of the licensed commercial bank has a substantial interest, being an interest acquired either before or after the appointment as the director, unless such security as may from time to time be approved by the Monetary Board is given and such accommodation is sanctioned at a meeting of the Board of Directors of the licensed commercial bank by the votes of not less than two-thirds of the number of its directors other than the director concerned.”
Asked about the process, Rajapakshe said that his firm has been a client of the People’s Bank for more than thirty years and that when the Board had to approve of this particular loan for his company he declared his interest in it and was not present in the room when the vote was taken.
“This is the standard process that we are expected to follow,” he told EconomyNext.
The complaint was handed over to the Director of Bank Supervision of the Central Bank, the regulatory authority of the People’s Bank, the SJB said.
The Working Capital loan is offered to companies in order that they can pay salaries and utility bills during the two-month period of March and April 2019, during the COVID 19 Pandemic.
The SJB Press Release said that their complaint was based on a media report. (Colombo, March 1, 2021)
Reported by Arjuna Ranawana