Sri Lanka govt to inject Rs5bn in fresh capital to People’s Bank
Jun 07, 2017 15:04 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT –Sri Lanka’s People’s Bank, the second largest bank in the island with one-third of loans going to state-owned enterprises, is to raise 5 billion rupees in fresh capital from the government to meet new international Basel III standards.
State-owned People's Bank's current regulatory capital shortfall to meet the new requirements are in excess 20.0 billion rupees over the next three years, according to the Public Enterprise Development Ministry.
The cabinet of Ministers, this week, approved a proposal by Public Enterprise Development Minister Kabir Minister to infuse 5 billion rupees in fresh capital into People’s Bank to strengthen its capital base and meet the new regulatory requirements.
People's Bank has assets of 1.4 trillion rupees and a lending portfolio of over 350 billion rupees, being a key lender to the state and state-owned enterprises (SOEs), with a third of the total loan book composed of lending to SOEs.
People’s Bank is also among the largest contributors to the national govenment in the form of taxes (including value-added tax), dividends and special levies, with a total of 20.5 billion rupees paid in 2016 alone.
Total contribution to the government made over the preceding 10-year period was 117.6 billion rupees.
The Public Enterprise Development Ministry said People’s Bank is the only financial institution of its scale not raise any new capital since 2008.
In addition, it has also paid a total of 34.9 billion rupees in dividends to the government since 2008.
The ministry said People's Bank is in the process of undertaking several initiatives to bridge its capital shortfal in close coordination with the Ministry of Public Enterprise Development and Ministry of Finance, but new capital infusion was necessary.
(COLOMBO, June 07, 2017)