Banks deny Government request to back Gamperaliya

Colombo (News 1st) - The Daily Mirror reported yesterday that the government is said to have inquired from the country’s banking sector of the possibility of increasing the pawning loans by at least half a trillion rupees. According to the report, the government has also asked the banks to join its much-hyped ‘Gamperaliya’ rural development programme and to provide concessionary loans to rural entrepreneurship under its ‘Enterprise Sri Lanka’ programme. In two separate meetings had with the bank chiefs during the last three weeks, the government had attempted to persuade them to channel funds into the rural community, ahead of some crucial elections on the horizon. One meeting said to have been chaired by R. Paskaralingam, an advisor to Prime Minister Ranil Wickremesinghe and to his National Policies and Economic Affairs Ministry, where the possibility of growing the pawning loans by at least Rs. 500 billion had been discussed—an apparent attempt to channel money into the rural communities, whose access to financing is limited. The meeting has also been attended by some senior Central Bank officials. The report adds that however, the proposal, according to one bank official who attended the meeting, had been contingent on safeguarding the banks from any gold price volatility- related losses in the global market. The meeting had ended inconclusively. Ever since Sri Lankan banks wrote billions of rupees off from their profits during 2013 and 2014, when the global gold prices crashed, they practice extreme caution in granting gold-backed loans. The report goes on to note that, the Central Bank had requested the private banks to join the government’s ‘Gamperaliya’ rural development programme and ‘Enterprise Sri Lanka’ programme by providing non-collateral concessionary rate loans to build rural entrepreneurship in multiple sectors. However, the private bank CEOs were said to have not shown much enthusiasm as they continue to grapple with rising non-performing loans and moderate growth. The report published by Daily Mirror quotes economists saying, both attempts by the government – to increase pawning loans and offer concessionary loans under ‘Gamperaliya’ and ‘Enterprise Sri Lanka’ through the banking sector—are nothing but a creative way to distribute money among rural communities to sway their votes, ahead of the impending elections.