Banks stable under CB scrutiny
Central Bank Governor Ajith Nivard Cabraal reiterated that the local
banking system is stable and none of the other private or State banks
are under scrutiny.
Governor of the Central Bank, Ajith Nivard Cabraal with CEO,
Seylan Bank, Ajith Pasqual at the Central Bank yesterday.
Picture by Sumanachandra Ariyawansa
Speaking at the Central Bank yesterday on the Seylan Bank controversy
he said the Bank Supervision Unit had been following the developments of
the bank for a long time.
“It was after a thorough investigation that we decided to vest Seylan
Bank with the Bank of Ceylon and it was not after an overnight
decision,” he said.
“A liquidity crisis can happen in any society. We saw signs of that
happening in the aftermath of the Seylan Ceylinco crisis.”
The Governor also said after the fall of Pramuka Bank the Central
Bank wanted to make sure that this would not happen again.
“This is why we intervened and took meaningful action to maintain
stability of the financial system,” he said.
This arrangement is aimed to provide confidence to the public in the
banking sector in general, and Seylan Bank in particular.
While assuring that it would be business as usual for Seylan Bank
customers, he said the proposed equity sale of the Bank could go through
as usual. “We have also lifted the trading halt by the Colombo Stock
Exchange and selling of its stakes are also possible,” he said.
Commenting on the unlicensed financial companies the Governor said
that action is being taken with regard to them. “None of the
unauthorised finance companies have met the Central Bank criteria and
legal action is being contemplated,” he said. “The bank has on many
occasions warned the public not to deposit there earnings in these
institutions,” he said.
Cabraal also chaired a meeting comprising CEO, Seylan Bank, Ajith
Pasqual and the corporate management of Seylan along with the Bank’s new
Directors E. Narangoda (Chairman), Lalith Withana, Nihal Jayamanne PC
and Neomal Gunawardena on Tuesday.
The Bank of Ceylon, being the largest commercial bank, will add
strength to the banking business of the Seylan Bank, it was noted by the
Seylan is the fifth largest commercial bank in the island and the
third largest private bank, with over 100 branches.