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Wednesday, 4 September 2019 00:30 - - {{hitsCtrl.values.hits}}
Ahead of the People’s Bank (Amendment) Bill being taken up in Parliament today to incorporate committee stage changes, the Finance Ministry insisted the new legislation was not an attempt to privatise the Bank, and any statements made by detractors were politically motivated and baseless.
The Government emphasises that the proposed amendments to the People’s Bank Act never aimed to privatise the People’s Bank. The only objectives are to increase the authorised share capital of People’s Bank and to enable the Bank to issue debentures without the additional requirement of obtaining a treasury guarantee, the Finance Ministry said in a statement yesterday.
“As per Section 13 of People’s Bank Act 29 of 1961, the ultimate ownership of the People’s Bank is vested with the Government of Sri Lanka. Its responsibility lies on the Secretary to the General Treasury. The People’s Bank Act clearly states that People’s Bank shares cannot be sold to any party other than cooperative societies or the Secretary to the General Treasury,” the statement said.
The Finance Ministry pointed out Section 13 has not been included in the proposed Amendment Bill let alone made provisions to amend it. Proposed amendments only seek to amend Sections 12, 20, 21 and 43 of the People’s Bank Act, it said.
“The People’s Bank Act amendment process started in 2013. Hence, various statements made to the effect that People’s Bank Act Amendment Bill aims to privatise the Bank, are nothing more than the politically motivated and baseless assumptions made by certain political leaders, who are attempting to mislead the public for their own personal gain at this juncture,” the statement said.
The objectives of amending these four Sections are: increasing the authorised share capital from Rs. 1 billion to 50 billion, and enabling People’s Bank to issue debentures, without the additional requirement of obtaining a Treasury guarantee. All other State banks issue debentures without being backed by a Treasury guarantee.
“According to the legislation that established Bank of Ceylon and other State banks, there is a mechanism as well as permission for these State banks to issue debentures to fulfil their regulatory requirements. But no one is levelling privatisation allegations against these banks.”
The Government reiterates that after the People’s Bank Act has been amended, there is no opportunity whatsoever to convert issued debentures to share capital. This is because Section 13 of the People’s Bank Act does not permit such conversions.
