By: Staff Writer
June 30, Colombo (LNW): The Sri Lanka Bank’s Association (SLBA) has strongly rebutted recent criticisms leveled against banks by two senior lawmakers, describing their remarks as misguided and detrimental.
The SLBA’s response follows statements by Ministers Ramesh Pathirana and Wijeyadasa Rajapakshe at an MSME awareness conference, alleging banks misuse lending based on personal and political ties, abuse parate laws, and exploit customers.
The SLBA asserts these claims are unfounded, stressing that loans are rigorously managed and debts recovered responsibly.
Citing the Finance Ministry’s Annual Report, which highlights substantial lending to SMEs in 2023 amounting to Rs. 704 billion, the SLBA assures depositors that loan recovery safeguards their funds.
They argue that while some borrowers struggle with unproductive ventures, banks work to resolve these issues through cooperative reviews, not lobbying. They emphasize their commitment to repay depositors as promised and support viable businesses, especially amid external crises like COVID-19 and economic downturns.
The SLBA acknowledges a small but vocal minority of borrowers resisting necessary business reviews, potentially risking depositors’ security.
They emphasize that banking practices adhere to strict regulatory standards, crucial for economic stability and growth. The association underscores banks’ pivotal role in national economic support, including investment in government securities and facilitating essential imports.
The Association pointed out that banks have helped and continue to help borrowers including MSMEs that got into difficulty due to their exposure to external risks such as the COVID-19 pandemic, the Easter Sunday attacks of 2019, and the economic crisis, and that many of these borrowers have overcome those difficulties.
“The banking sector though much maligned, also supported the Government as well as the country’s economy with US Dollar and Rupee investments in Government securities, and providing foreign currency when there was need to fund essential imports,” the Association said.
“The reality however, is that some businesses have gone beyond the resolution stage and need to be exited by the owners. Such businesses must understand that depositors’ funds cannot be misused to support a desire to continue failed businesses with the backing of non-banking sector lobbyists. This is dangerously misleading,” the SLBA said.
“We wish to emphasise,” the SLBA concluded, “that banking is a regulated industry with the highest standards of compliance, and a stable and progressive banking system is the bedrock of future economic growth. Making sweeping generalisations and unfounded accusations about banking practices is therefore extremely ill-advised.
In conclusion, the SLBA urges against sweeping criticisms of banking practices, asserting the industry’s adherence to high compliance standards and its indispensable role in fostering economic resilience. They caution that unsubstantiated allegations undermine public trust and the stability of the banking sector, advocating for informed dialogue over sensational claims.
