Rumours baseless: No moves to privatise People’s Bank Amendments to Act only increases authorised share capital

The government emphasized yesterday that the proposed amendments to the People’s Bank Act never aims to privatise the People’s Bank and added the only objectives were to increase the authorized share capital of the Bank and to enable the Bank to issue debentures without the additional requirement of obtaining a treasury guarantee.   

The Ministry of Finance stressed that as per the section 13 of the People’s Bank Act 29 of 1961, the ultimate ownership of the People’s Bank is vested with the government of Sri Lanka. Its responsibility lies with the Secretary to the General Treasury. The People’s Bank Act clearly states that the People’s Bank shares could not be sold to any party other than cooperative societies or the Secretary to the General Treasury.   

“Government emphasizes that section 13 has not been included in the proposed amendment bill let alone amend it. The Proposed amendments only seek to amend sections 12, 20, 21 and 43 of People’s Bank Act,” a Finance Ministry spokesman said in a statement. .   

Objectives of amending these four sections are: increasing the authorized share capital from Rs. 1 billion to 50 billion and enabling People’s Bank to issue debentures without the additional requirement of obtaining a treasury guarantee. All other states banks issue debentures without being backed by a treasury guarantee.   

According to the Parliamentary Acts which established the Bank of Ceylon and other state banks, there is a mechanism as well as permission for these state banks to issue debentures to fulfill their regulatory requirements. But no one is levelling allegations of privatization against these banks.   

The government reiterates that after the People’s Bank Act has been amended, there is no opportunity whatsoever to convert issued debentures to share capital. This is because section 13 of the People’s Bank Act does not permit such conversions.

 The People’s Bank Act amendment process started in 2013. Hence, various statements made to the effect that the People’s Bank Act amendment Bill aims to privatize the Bank, are none other than the politically motivated baseless assumptions made by certain political leaders who attempts to mislead the public for their own personal gain at this juncture, the Finance Ministry added.