CB warns banks of stern action

In what could be termed as the most blunt message issued so far, the Central Bank Governor Prof. W.D. Lakshman today asked banks to pass on the announced relief measures to their customers forthwith or face legal action.

​During the last two weeks, the Monetary Board and the Central Bank announced a slew of relief measures for borrowers—both businesses and individuals—whose businesses and incomes have been affected by the disruptions caused by the spread of COVID-19.

The Monetary Board last week announced a Rs.50 billion relief package for small businesses, individuals and self-employed and requested all banks and finance companies to participate in the package to provide relief to the affected segments.

However, Mirror Business learnt that the Central Bank has received a deluge of complaints over disregard or indifference by banks and finance firms towards these circulars issued by the Monetary Board.

“A common problem world over is the transmission delays between the Central Banks and the banks and other financial sector institutions in executing the policy actions announced by the Central Banks. This is prevalent in Sri Lanka too.

The complaints about this issue is overwhelming these days,” a statement issued by Governor Lakshman said.

In order to ensure that the delivery of the relief package will have less strain on the banking and finance sectors and also to provide them more space to pass these benefits to the affected segments, the Monetary Board this week announced regulatory forbearance on a number of areas from capital, capital adequacy, liquidity, identification of non-performing loans, filing of statutory returns and publication of quarterly financial statements.

“What I request from the banks is to execute the circulars issued by the Central Bank stipulating relief measures to the small businesses and individuals forthwith considering the unprecedented situation at present.

At the same time I request those banks who continuously shy away from their obligations, to function in a manner which will not force the Central Bank to resort to legal actions against such institutions,” the Governor stated.

He also said that although the crisis has brought pain, the Central Bank remains positive that it could re-calibrate its monetary policy fundamentals to make them healthier in the post-COVID-19 era.

“There are no inflationary fears in the country. There are no serious issues on the stability of the financial system, despite some solvable issues. COVID-19 will pass. My message is that we must face the period after COVID-19 with courage and confidence,” he added.