Joan de Zilva Moonesinghe: A tough banking examiner to the end

Joan de Zilva Moonesinghe

The departure of a tough banking examiner

Joan de Zilva Moonesinghe who made a sudden departure from us last week wore many hats in her relations with me. She was my friend, colleague, fan, critic, advisor, and in many respects, mentor. Of late, she was a fellow columnist with me at Daily FT. Outwardly, her face was always lit with a friendly smile. But inwardly, behind that smile, it was a core value system made up of solid tough steel which no one could bend to his advantage. Thus, she was a tough banking examiner to the end.

The young stenographer in the Bank Supervision Department

I first met Joan in 1973 when I joined the Central Bank as a probationary staff officer. At that time, she was an English stenographer attached to the Bank Supervision Department. We, the new cubs in the bank, had to complete a year-long training by working practically for about one month in each department. When we were posted to the Bank Supervision Department, Joan was there wearing her hair short and clad in a white pair of trousers and a shirt producing documents on old manual typewriters along with her other colleagues in the typing pool. 

The quest for learning that led to professional success

The bank examiners in the department did their examination work in the designated banks in the morning and spent the afternoon to write their examination reports. They just got the stenographers to sit in their front and dictated the reports. Joan was a preferred stenographer because she not only did a correct transcription of what was dictated to her but also corrected the grammar as well as the inconsistencies in the reports so written.  

I recall one of the examiners telling me after he had given a dictation to her that she would one day head that department. It was not a wish of a boss about a good worker but an accurate prediction based on his rating of this young stenographer in the department. At that time, she had been completing her final examination at the Chartered Institute of Bankers, London, the preferred professional body by Sri Lankan bankers to gain their professional qualifications in banking. 

Since the bank had an accelerated promotion scheme for non-staff grade officers who had completed the final examination of the Chartered Institute of Bankers, London, or its local counterpart, Institute of Bankers, Joan had a good chance of becoming a staff officer of the bank soon. 

This she did by changing her career from stenographers’ service to general service. Within a few years, she successfully faced the interview panel that examined the suitability of eligible non-staff officers and joined the bank’s executive grade. As expected, she was posted to the Bank Supervision Department and that was her career in the bank until she retired in 2006. 

Continuous investment in the fine art of bank supervision

Except for a brief period during which her career was interrupted when she accompanied her Ambassador husband, Anil Moonesinghe, to Switzerland, Joan was in the Bank Supervision Department throughout. 

Upon promotion to the staff grade, she joined its rank as an Assistant Examiner and went through the mill in the hard way learning the fine art of bank examination, regulation and supervision. A remarkable quality which I have observed in her was the ever willingness on her part to learn new stuff.  

I recall one of the examiners telling me after he had given a dictation to her that she would one day head that department. It was not a wish of a boss about a good worker but an accurate prediction based on his rating of this young stenographer in the department. At that time, she had been completing her final examination at the Chartered Institute of Bankers, London, the preferred professional body by Sri Lankan bankers to gain their professional qualifications in banking

Bank supervision was a discipline which required its practitioners to keep themselves updated continuously. From its original philosophical orientation, it had in the last few decades become more technical in its approach as well as its application. The practitioners in the old school usually gave up learning technical stuff relegating themselves to the old approach. 

The challenge which Joan faced as the Director of Bank Supervision was twofold. First, she had to familiarise herself with the new technical approach to bank supervision. Second, she had to equip her colleagues in the department with new knowledge so that they would be able to meet the supervision challenges faced by a regulator in the new millennium. Joan took up both challenges seriously.  

She attended practically all the training programs and conferences hosted by the global leader in bank supervision, the Basel based Bank for International Settlements or BIS and those arranged by the Bank of England. Having updated herself, she got her staff to follow rigorous training in the new technical aspects of bank supervision conducted locally as well as abroad. 

I recall that when the bank embarked on a project in early 2000 to convert it to a learning organisation under its modernisation program, Joan was a frontrunner in the project. She got her staff to do research and share their knowledge with colleagues by conducting departmental seminars and writing to bank’s publications. Her vision was based on creating a knowledge society within bank supervision. To make that vision a reality, she got those working under her to become responsible members of that society. 

A tough disciplinarian

She was a tough disciplinarian in bank regulation. She never tolerated regulatory forbearance in the banking sector whether it was to protect the ailing state banks or to cover up misdeeds in powerful private banks. I recall her arguing back with Monetary Board members when suggestion was made to her to have a relaxed attitude toward certain banks. Sticking to their grounds and fighting for principled practices were exactly what was expected of professional central bankers. Joan played this role as a true central banker. Sometimes she managed to have her point accepted. Some other times, she was overruled. In hindsight, I recall that most of the banking scandals that hit Sri Lanka’s banking sector would have been avoided had her point at that time been given due consideration. 

Aborted report on Golden Key Company

I can recall one such event. As early as 2004, there was evidence that the private credit card operator, the Golden Key Company, was in the unauthorised deposit taking business. When a whistleblower in the company alerted the Central Bank about it, Joan set up a team, supported by the CID officers attached to the bank at that time, to examine and report on whether the company was indeed soliciting deposits from the public without the authority of the bank. The report provided positive evidence and was duly presented to the authorities. At that time, the company had mobilised only about Rs. 7 billion as deposits. Had action been taken at that time, the total loss could have been contained at that level. But to Joan’s dismay, nothing had happened and when it was finally blown up in the market, the total deposits had ballooned to some Rs. 27 billion which was too much for the depleted asset base of the company.

The iron lady of bank supervision 

In the banking circles, she was known as the iron lady of bank supervision. This was pretty much obvious when the Governor met the heads of local banks in the monthly meeting with banks’ CEOs. Though the Governor chaired this meeting, it was the Director of Bank Supervision that was the magnum force there. When an issue was raised at the meeting, everybody looked at the Director for clarification. Joan was able not only to clarify the issues perfectly but also reinforce the Central Bank’s supervisory authority on banks. 

The stint in Brunei

After retirement, she served the Central Bank for a brief period as consultant to set up the new Financial Intelligence Unit or FIU. Her experience in banking and bank supervision was indeed an asset to the Central Bank during that formative period of FIU. She then left the country’s shores to function as a consultant to the Sultanate of Brunei. At that time, Brunei was breaking away from the banking system of Singapore and setting up its own bank regulatory mechanism. Joan’s mission was to help Brunei to build up this mechanism, train officers in the art of bank supervision and advice its Ministry of Finance on the legislative structure needed to establish a strong regulatory system in the country. Having accomplished this task, she returned to Sri Lanka. 

The budding columnist

Joan took up the task of educating fellow Sri Lankans on the intricate and complex banking sector issues in the country. She started sharing her wisdom with readers by writing articles to newspapers. One such newspaper which regularly accommodated her articles in its Guest Column was the Daily FT. She was a fan as well as a critic of the articles that I wrote to FT. If any of the arguments I had made in my articles was not acceptable to her, she immediately raised her objections with me.  

Sticking to their grounds and fighting for principled practices were exactly what was expected of professional central bankers. Joan played this role as a true central banker. Sometimes she managed to have her point accepted. Some other times, she was overruled. In hindsight, I recall that most of the banking scandals that hit Sri Lanka’s banking sector would have been avoided had her point at that time been given due consideration

The bone of contention here was ideological, she being a centre-leftist while I holding centre-rightist views. Our internet correspondence is full of arguments, counterarguments and still counterarguments on some of the articles that I had published. On most occasions, she did not stop at that. She wrote to FT presenting her point in rejoinders to what I had written. But, like a true professional, she forwarded those counter articles to me and sought my views. I know after I had explained some points, she changed her stance and published an edited version of the original counter article she had written. 

Fan as well as critic

For instance when the new Yahapalana Government introduced the mandatory credit allocation as a strategy to direct credit to needy and priority sectors, I wrote about its fallacious objective giving examples from the failed mandatory credit allocation practices in neighbouring India (available at: http://www.ft.lk/columns/central-banks-mad-rush-to-mandate-credit-shocking-banks-is-not-in-accord-with-pms-social-market-econ/4-597151 ). Joan countered me in an article written to FT (available at: http://www.ft.lk/article/599027/Rationale-for-mandatory-credit-allocations--A-counter-view ). Her argument was that the government has a role to play in an economy for directing credit to socially productive sectors and many central banks in the Asian region had resorted to that strategy to uplift sectors that had been marginalised by the mainstream banking institutions.

Justification of mandatory credit allocation 

She had quoted the example from the world’s thought-to-be the biggest free market economy, USA. In that country, quotes Joan, the enactment of the Community Reinvestment Act or CRA in 1977 had sought to fill a gap that had existed at the community level as against the much praised corporate level. According to the fathers of CRA, economic and community development had been the responsibility of both the state as national adjudicator and the banks as corporate citizens. The banks in this role have the societal duty to sow the seeds of prosperity in surrounding communities from where they have reaped their rewards. 

Thus, the aim of CRA had been to prevent the shifting of local funds by banks to more profitable urban sectors. Joan, standing on her centre-leftist stance, had argued for the mandatory credit allocation introduced by the Government. 

Her conclusion in this respect has been well-revealing: “Most banks in Sri Lanka show performance in community development as part of their corporate social responsibility (CSR).But they wouldn’t have to do this if, on a branch-wise or district-wise basis, they demonstrated performance in community development and upliftment in their branch locations, or on a centralised district basis”.

She goes on to argue further: “Therefore, it would have been useful herein Sri Lanka too, to assess the situation vis-à-vis the deployment of credit within the communities in which the bank branches are located and to ensure that community development too was encouraged. A co-ordinated effort towards community development by all banks within a district, could also be encouraged to alleviate the burden that would otherwise fall on the two state banks which have a much wider branch outreach than the private sector banks”. 

The missed writer on the banking sector

She had written to Daily FT on the need for consolidation of the banks in the country, disclosure of information by banks in their annual reports, stability of the banking system in Sri Lanka, banking regulation and Basel agreements to mention but a few. Her lucid writing style and taking a stand on a point had been two plus points she had earned as a contributor. She through her contributions had educated not only the uninformed but also the informed. With her sudden departure, her readers will miss her.

(The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected].)