Sri Lanka’s Samurdhi Banking System, the rural bank network of the poorest of the poor, is nearly collapsing following the withdrawal of Rs.50 billion from this system in 2020 and owing to the failure to reimburse the money up to now, authorities of the bank warned.
The government has given an assurance that it will reimburse the money via the Treasury but it has repaid only Rs.7 billion leaving a massive sum of Rs.43 billion as unpaid dues for nearly two years, Secretary of the Samurdhi Development Officers’ Association, Chamara Kalumaddumage disclosed.
This money had been withdrawn from the Rs.200 billion Samurdhi fund to pay relief allowance of Rs.5000 for two months to four million beneficiaries in poorest of the poor families.
He noted that there was no financial allocation made to reimburse this money even from budget 2022 and thereby triggering a risk of a collapse in the Samurdhi Banking system.
General Secretary of Samurdhi Development and Agricultural Research Officers Association and SLPP MP S.A.D. Jagath Kumara disclosed that he has written to the country’s leaders requesting them to take immediate action to repay the balance Rs.43 billion to the Samurdhi fund.
He noted that failure to repay this sum to the Samurdhi fund is unreasonable by beneficiaries and he would protest along with them if no action is being taken to settle this matter by the authorities.
In addition to this relief payment, the Government has made an advance payment of Rs.10,000 to two million Samurdhi beneficiary families in April 2020 prior to the Sinhala and Tamil New Year.
This money has been released by Samurdhi banks and its recovery will depend largely on the duration and severity of the coronavirus outbreak, a senior official of the Samurdhi Development Department said.
This massive amount is still to be recovered from Samurdhi beneficiaries and the repayment has become a difficult task for them due to present economic difficulties in the COVID-19 pandemic period, he revealed.
A separate sum of Rs.25.72 billion has been disbursed among the poor as relief allowance for May 2020, official data showed.
For this amount, the government has raised additional sum of Rs.16 billion from a state bank loan with a Samurdhi Fund guarantee to pay Rs.5,000 relief allowance to the poor.
As a result of these withdrawals, Samurdhi banks are facing liquidity and capital adequacy challenges including subdued loan growth, liquidity issues and erosion of deposits amid lower interest rates, economic analysts said.
According to the Ministry of Finance data, there are 1,074 Samurdhi Banks, 331 Samurdhi Regional Societies, and one Samurdhi General Society.
These Samurdhi Societies own assets exceeding Rs.8.3 billion and the Samurdhi Bank alone has Rs.148.5 billion assets under its portfolio with a deposit base of over Rs.74 billion