How did a Finance Minister give instructions to commercial banks to be integrated into NPP?

How did a Finance Minister give instructions to commercial banks to be integrated into NPP?

Written by Keshala Dias

16 Jul, 2017 | 9:05 pm

A National Payment Platform is a system where online transactions can be carried out using electronic payment methods such as credit cards.The system will connect state institutions, banks, other financial institutions and the general public into one network.

With this system, payments and settlements can be carried out online easily.

The Central Bank confirmed to News1st that initial steps were taken to create a National Payment Platform.

The initiative taken by the Central Bank was to connect the commercial banks with the Automated System for Customs Data (ASYCUDA).

The custom clearance in the country is carried out through ASYCUDA. However, only two state banks can carry out online transactions with this system.

The Central Bank through its direct intervention has created a system through ‘LankaClear’ that would link the commercial banks with this system.

A letter sent by the Director of Payment and Settlements of the Central Bank to all Chief Executive Officers of commercial banks on October 11, 2016 says, the Monetary Board has granted approval to LankaClear Private Limited to offer Inter Bank Fund Transfer Facility in respect to payments to Sri Lanka Customs and ASYCUDA.

The letter says that the system will be available from November 1, 2016.

While LankaClear was taking initial steps, with the approval of the Monetary Board of the CBSL, to create a National Payment Platform, these attempts have been disrupted.

Several days before the letter of the Director of Payment and Settlements of the Central Bank, that is on October 3, 2016, the Finance Minister at the time, Ravi Karunanayake, has also sent a letter to all the CEOs of commercial banks.This letter says that ICTA has already completed the integration of ASYCUDA system with the National Payment Platform.

The minister, in his letter, states that the Finance Ministry intends to launch the system on November 1, and requests the commercial banks to intergrate its software with the NPP.

The letter provides the telephone number of the CEO of ICTA Muhunthan Canagey, asking that he be contacted if there is a need for clarifications.

The Governor of the Central Bank Dr. Indrajit Coomaraswamy had written a letter on July 8, 2016 to Minister Ravi Karunanayke, where he says that the system should be under the supervisory and regulatory role of the Central Bank of Sri Lanka.

In this letter, the Governor says that the Central Bank has no regulatory role over this proposed National Payment Platform.

The Central Bank of Sri Lanka is under the Ministry of National Policy and Economic Affairs which is a ministry that falls under the Prime Minister.

All licensed commercial banks in the country fall under the Central Bank of Sri Lanka.

In this backdrop, how did the Minister of Finance provide instructions to commercial banks to be integrated into the National Payment Platform?

Why are there continuous attempts to enact proposals that have been criticised by the Governor of the Central Bank of Sri Lanka?