29 May 2024 02:02 am Views - 1451
By Nishel Fernando
As a part of the government’s policy decision to regularising Sri Lanka’s Samurdhi banking system, the government has decided to entrust the auditing of the Samurdhi Community Based Banks and Samurdhi Community Based Banking Societies to the National Audit Office (NDO).
President Ranil Wickremesinghe in his capacity as the Minister of Women Affairs and Social Empowerment sought the approval of the Cabinet of Ministers this week to amend the Samurdhi Act No.1 of 2013 as amended by Divineguma (Amendment) Act No. 2 of 2017 and to advise the legal draftsman to prepare the relevant bill for this purpose.
“It has been recognised that auditing Samurdhi Community Based Banks and Samurdhi Community Based Banking Societies by the National Audit Office will also help maintain transparency in their operations and increase public confidence and acceptance,” Cabinet Spokesperson Minister Bandula Gunawardane told the weekly cabinet media briefing yesterday.
According to the Government Information Department, there are 1092 Samurdhi Community Based banks and 335 Samurdhi Community Based Banking Societies functioning across the country to promote microfinance activities.
As per the provisions of the Samurdhi Act, the Samurdhi Community Based banks and Samurdhi Community Based Banking Societies are audited annually by the Internal Audit Division of the Samurdhi Development Department.
However, the Samurdhi Act does not include the provision it should be audited by the National Audit Office.
According to NDO, there were 242 reported frauds to the tune of 351.72 million identified during the period of 2014-2023.
Over the years, many fraudulent incidents of stealing money from these banks with the help of its managers and Samurdhi Development Officers under the guise of poor relief programmes have been reported.
The Samurdhi banking system has assets worth Rs.400 billion including the deposits of Samurdhi recipients (compulsory savings) which have been invested in banks and government securities. As of 31st of December 2022, 1089 Samurdhi Community Based Banks had Rs.155.1 billion worth of deposits from its 4.11 million members. However, the outstanding balance thereof granted to the beneficiaries was only a mere Rs.68 billion, according to NDO.
Accordingly, it was observed that it has been operated with the purpose of making profits and directed towards profitability at present by acting away from the purpose of empowering the Samurdhi beneficiary even though the. Community Based Banking System had been started with the purpose of empowering the Samurdhi beneficiaries.
The government early this month announced a policy decision to regulate the Samurdhi banking system as a microfinance banking system of the Central Bank (CB) to provide the “Aswesuma” welfare benefit to people.
President Wickremesinghe has also directed officials to look into the possibility of developing the Samurdhi Bank further into a state rural bank as it cannot be continued as an informal bank.