Harsha faults Govt. for raw deal to migrant worker deposits at NSB

Saturday, 7 June 2014 00:05 -     - {{hitsCtrl.values.hits}}

Opposition lawmaker Dr. Harsha de Silva recently found fault with the Government for discriminating against migrant worker depositors that receive an interest rate of 2.25% as against other bonds issued by the National Savings Bank at 8.875%. According to Dr. de Silva such impudent action has forced NSB to reduce its net profits and also increase its NPLs. “The Government holds that it is the Chairman’s responsibility is to monitor the bank’s Directors. But when it comes to NSB this didn’t happen. We can remember Chairman Kariyawasam was discharged as a result of the ‘The Finance’ debacle. So, a new Chairman was appointed. This new Chairman was forced to obtain a loan worth of $ 750 million subject to a minimum of $ 500 million. But he refused this. He was also removed and another Chairman; if I’m not mistaken Ms. Nalini was appointed. So, the respective loan was obtained during her tenure. But the loan obtaining process was incomplete for a simple reason. “When this loan was issued on 13 September 2013, NSB agreed to pay a loan interest of 8.875%. But three days later the rate came down to 8.4% when it was available in the secondary market. It further came down to 8.05% on 26 September. Those who bought these were able to obtain a capital gain of 3.3% in US dollars within a period of one week. If the migrant workers deposit money in NSB, they receive 2.25% in US dollars. Even if they deposit $ 50,000 with NSB they receive an interest of 3.75%. But the others are receiving 8.875% interest for the bonds. Is this the reason the profits of NSB came down drastically? In 2011 the net profit of NSB Rs. 6.1 billion. This came down to Rs. 4.3 billion in 2012. The NPL ratio has gone up to 9.2% during the 1Q this year,” he charged. In response Minister of International Monetary Co-operation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama stated that he does not agree with Dr. de Silva and would have his own opinion. “The time we were dealing, the interest rate could have been high. We can’t come to a conclusion on this. During Prime Minister Thatcher’s time, the loans obtained in UK almost brought a no-confidence motion against her Government. We took this loan to arrest a broad question. We are diversifying our loan portfolio strategy,” said Minister Amunugama.