Delving deeper into Lankaputhra Development Bank procedures and other mysteries

Delving deeper into Lankaputhra Development Bank procedures and other mysteries

Delving deeper into Lankaputhra Development Bank procedures and other mysteries

Written by Tharushan Fernando

23 Oct, 2016 | 9:10 pm

On March 24, the Central Bank of Sri Lanka annulled the appointment of the Chairman of the Lankaputhra Development Bank, confirming that the Banking Act is in force and the need to protect the banking system, which can be considered an industry.

Action TV pointed out on Saturday that the subsequent procedure followed by the Central Bank with regard to Lankaputhra Development Bank, cannot be condoned.

Against this backdrop, until September 2, Lasantha Goonawardena had been able to continue to function as the Chairman of Lankaputhra Development Bank, aggravating a state of lawlessness.

Given that his appointment was annulled on March 24, it is the responsibility of the Central Bank to reveal to the country, on what basis Lasantha Goonawardena remained as Chairman until September 2.

On March 24, the Central Bank highlighted that Lasantha Goonawardena’s appointment had been annulled as he had exercised executive powers in spite of the fact that he was not an executive director and that he had divulged bank secrets regarding persons who had dealings with the bank.

While Lasantha Goonawardena should have filed an appeal against the refusal of appointment within two weeks of March 24 , the appeal was only filed in June.

The fact that it was accepted by the Central Bank is a blatant violation of the Banking Act.

At the same time, while the Banking Act only provides for one instance of appeal within a time-frame, the fact that the Central Bank, through a letter dated September 2, allowed Lasantha Goonawardena, whose initial appeal was two months late, further opportunities to submit appeals, is also a violation of the Banking Act.

The Central Bank which made the right decision at first, and followed it up with wrong decisions, made the right decision again, with regard to Lankaputhra Development Bank, on Friday.

On Friday, the Central Bank having considered Lasantha Goonawardena’s appeal, noted that he is not qualified to continue to hold the position of Chairman of Lankaputhra Development Bank.

However, within a few hours of this announcement, the meeting of the Board of Directors of Lankaputhra Development Bank scheduled later on Friday, was cancelled by a written notice from Lasantha Goonawardena, which has no legal basis.

In the notice, Lasantha Goonawardena notes that while he has been removed from the position of Chairman, he is still a member of the board of directors.

The fact that Goonawardena is unable to comprehend that when an individual is removed as chairman he is automatically removed from the board of directors, raises questions about his general knowledge and comprehension.

At the same time, by bowing to Goonawardena’s edict, which has no legal bearing, the other members of the board of directors have highlighted their own lack of knowledge, rather than despair.

It is the responsibility of the Central Bank to ensure that directors are made aware of guidelines on the administration of a company, let alone the Banking Act.

The Central Bank also has a far more important responsibility.

Action must be taken under section 79 of the Banking Act against the former Chairman of the Lankaputhra Development Bank, for divulging bank secret,s in violation of the provisions of the Act.

As such, a case should be filed at the Magistrate’s Court against the former chairman.

Notwithstanding having violated the Banking Act, the former Chairman of the Lankaputhra Development Bank also acted to reduce the bank to a retailer. Action TV will divulge more information on this issue in the near future.

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