Features

My experience in turning around the Merchant Bank of Sri Lanka (MBSL)

Published

9 months ago

2026/01/11

LESSONS FROM MY CAREER: SYNTHESISING MANAGEMENT THEORY WITH PRACTICE – PART 29

The last episode covered the final stages of my work as Advisor to the National Productivity Drive at the Ministry of Industrial Development. Soon after, in September 1998, I accepted the position of Managing Director of the Merchant Bank of Sri Lanka (MBSL). This chapter shares key events and lessons from my time there.

First few weeks at MBSL

The Board agreed that, for the first month, I would work only half-days, as I still had obligations I could not abandon. I was organising the International Convention on Quality Circles 1998, which attracted many foreign participants, and although we had appointed an event organiser, numerous arrangements still required my involvement. I will write more about that Convention later in these memoirs.

Those half-days turned out to be useful. They allowed me to quietly observe and understand the situation. MBSL was in worse shape than I had expected. The financial problems were visible to anyone who read the statements. The bigger crisis, however, was the staff’s morale and the rapid loss of staff members.

During the interim management period, many staff benefits had been cut, and several senior executives had already left. In the first few months, farewell gatherings became routine. It felt like rats leaving a sinking ship. And indeed, the organisation was sinking. Yet I had accepted the challenge — largely because I sensed that the Chairperson could secure government support, which she had already begun to do.

The broader environment added to the tension. The LTTE conflict was still active. Our office building, a very tall building located near the Colpetty junction, was a prime target. It had an Air Force unit with anti-aircraft guns on the rooftop one floor above he boardroom.. No one was allowed there without special permission, even though the area had originally been designed as a rooftop function space.

The first board meeting was quite hilarious because, while we were discussing important strategic issues, the upper floor was reverberating with a baila session, with boots tapping the floor keeping time. Apparently, the unit had an assurance that there would be no air strikes, and they could take a break.

My own office was spacious, but the windows were blocked because Temple Trees — the official residence of the Prime Minister — was clearly visible if not. At first, working without any outside view felt quite oppressive. Eventually, I grew accustomed to it.

Once I began full-time work in October, I carefully examined the situation with the help of my capable team. Several senior employees were not leaving for higher-paying opportunities or foreign jobs — they were committed, though uncertain about the future.

Then came investigations by the Central Bank and the Securities and Exchange Commission. Much of my time was spent responding to information requests and ensuring that all releases of information were approved. Many years previously, MBSL had unintentionally become a subsidiary of the Bank of Ceylon (BOC) when BOC’s investment arm purchased shares that pushed ownership above 50 per cent.

Hence although we were not a deposit taking institution and therefore not under the regulatory oversight of the Central Bank, we were under the Central Bank scrutiny because we were a subsidiary of the BOC. Although we were independent in operations, the customary practice was that the BOC Chairman would also chair MBSL, together with other BOC directors serving on our board. Our Chairperson, Mrs Dayani de Silva, was determined to turn MBSL around.

At that time, we operated two main divisions:

· Corporate finance, including advisory and investment banking; and

· Leasing, including trade finance.

In addition, there were the service divisions such as Human Resources, Secretarial and Finance and Accounting

Staff matters and the trade union

Morale was low. staff resisted the benefit cuts and the shift toward rules that resembled those of government departments. Signing an attendance register was particularly disliked.

I reviewed the situation carefully. Some of the removed benefits saved only trivial amounts. I reinstated those. I also installed an electronic time-card system for everyone — including myself. I announced clearly that I would clock in every day, just as they did. Naturally, the first few months were not easy.

I began holding monthly staff meetings to explain what we were doing, why we were doing it, and where we stood financially. Communication had clearly been lacking earlier, and these meetings helped rebuild trust. I also operated an “open door” policy, welcoming any employee who wished to meet me. The performance appraisal system was another issue. Instead of motivating staff, it had become a source of resentment. I suspended it for two years and asked everyone to work together as one team.

Most employees up to the Deputy Manager level were unionised, affiliated with the Ceylon Bank Employees Union (CBEU), headed by Mr M. R. Shah. The collective agreement was due, and the union presented a long list of demands — many of them impossible, given our financial state. Normally, negotiations take place between the Employers’ Federation of Ceylon (EFC) and the CBEU. The Director General of the EFC, Mr Gotabhaya Dassanayake, advised me first to build mutual confidence, especially as I had never met Mr Shah before.

I invited Mr Shah to my office. Over tea, I openly explained the crisis we were facing, our restructuring plan, and the management approach we intended to adopt. He listened carefully and asked sensible questions. We parted on friendly terms, and more importantly, with a shared understanding.

A month later, negotiations began at the EFC. To my surprise, Mr Shah began by saying that, after speaking with the new Managing Director, he understood our difficulties and accepted the direction we were taking. He then withdrew several demands on the spot. I was relieved, not because demands were dropped, but because he had recognised our sincerity and our plan. Later, Mr Dassanayake telephoned to say he had rarely seen such cooperation. In time, as restructuring succeeded, we gradually restored many benefits. That entire episode reinforced a powerful lesson: honest communication and genuine leadership build trust far faster than confrontation.

Expanding leasing

The board was deeply concerned about the leasing division. Non-performing loans were very high, and they urged me to restrict new business and focus solely on recoveries. I informed the board that management was partly to blame because the staff was pressured to meet stretch targets, and all we got were substandard leasing facilities. Targets without safeguards are never beneficial.

My thinking differed. Aggressive recovery efforts often demoralise good customers and overburden staff. In addition, the customers were already in great difficulty because they had no financial means to meet their leasing obligations. Instead, I believed we needed to build a new, healthier portfolio, while also expanding fee-based advisory work with lower risk. I had also abandoned my consultancy business when I joined MBSL, and proposed creating a new subsidiary to bring that kind of business into the bank. The board rejected it – understandably, given past failures with subsidiaries, including one in Nepal.

We decided that if our leasing operations were to grow, they needed to feel more connected to ordinary Sri Lankans. Research revealed that many people viewed us as an “English-speaking bank.” That perception alone discouraged potential customers.

So, we refreshed our leasing brand. The new logo carried the Sinhala word for “leasing,” applications were printed in Sinhala, and signboards carried both languages. Even the telephone operator’s greeting changed. Instead of the polished “Good morning, MBSL,” which sometimes intimidated Sinhala-speaking callers, we switched to “Ayubowan, MBSL.” It was friendly, respectful, and immediately accepted across all segments.

When an SME business owner comes for a lease, they have already selected the vehicle, and the decision is more based on ego than on a business requirement. We would discourage them and enlighten them that the vehicle does not match their requirements, and advise them to select a smaller one. They look unhappy, but they finally agree when presented with the maths of repayment.

We also organised short educational sessions for our customers on how to maintain vehicles, extend tyre life, the importance of the correct lubricants, and improve customer service. These simple initiatives created goodwill, strengthened customer relationships, and soon, the leasing business began to grow. At the same time, we were tough on recoveries, and some unpleasant moments included we seized a vehicle when a couple was on their honeymoon. The board, while pressuring me to recover, also constantly reminded me that no strong-arm tactics should ever be used.

Improving cash availability

Before I joined, two government institutions had agreed to provide debentures, with Treasury comfort letters. However, a condition required us to build a monthly sinking fund for repayment. To me, this made little sense. We were already short of operating cash. Locking more away would only weaken us further.

The head of finance had faithfully followed the rule. I instructed him to stop doing so and to use the funds for business expansion. When the board asked how we planned to repay the debentures, my answer was simple: growing organisations borrow when repayment comes due — that is how business operates.

We also began selling off our minority shareholdings from our share portfolio wherever possible even at a loss. The market was depressed, and those investments in shares contributed nothing to our survival. We retained only the Merchant Credit of Sri Lanka and divested the others. Gradually, liquidity improved, and operations stabilised.

The thorny bonus issue

Before my arrival, the board had approved bonuses despite the 1997 crisis. I was surprised how it happened soon after chalking up a billion rupee loss. However, just three months into my tenure, the board refused the December 1998 bonus. I found myself in a painful position. The EFC warned that withholding payment was risky because bonuses were written into appointment letters. Yet, reality was clear — we simply could not afford it.

I addressed the staff personally, explained the situation frankly, and announced the decision. The disappointment was visible everywhere. But given the circumstances, they accepted it.

There were more challenges and many more lessons still to come. In the next article, I will continue the story of how, step by step, we navigated those difficulties and rebuilt the organisation.

(The writer is a Consultant on Productivity and Japanese Management Techniques

Retired Chairman/Director of several listed and unlisted companies
Recipient of the APO Regional Award for Promoting Productivity in the Asia-Pacific Region
Recipient of the Order of the Rising Sun, Gold and Silver Rays from the Government of Japan
Email: bizex.seminarsandconsulting@gmail.com)

By Sunil G. Wijesinha ✍️

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Features

Coercive laws recipe for future misrule

Published

1 hour ago

2026/10/13

Sahan Weerasooriya

by Jehan Perera

The NPP government is going after powerful figures from the past and present who have engaged in corruption, fraud and criminal activity in a way that no previous government in Sri Lanka has done. Former ministers, politicians and senior state officials are among those facing investigations and legal proceedings. The government has placed before Parliament a document listing 50 cases involving corruption, fraud and other crimes. These include not only financial offences but also cases relating to the Easter Sunday attacks, the killings of Lasantha Wickrematunge and Wasim Thajudeen, the disappearance of Prageeth Ekneligoda and attacks on journalists Keith Noyahr and Upali Tennakoon.

The significance of this effort is that it can demonstrate that nobody is above the law, regardless of political connections or social standing, which will help restore public confidence in institutions that have long been distrusted. It could also recover public resources, improve the investment climate and strengthen the foundations for a more prosperous and just Sri Lanka. When criticised for focusing on the past and not the present, the government position is that these investigations were initiated under earlier governments, particularly between 2015 and 2019, and that it is now allowing investigators to proceed to deal with the backlog without political interference.

But there is an aspect of the government’s approach that is less justifiable. While pursuing past wrongdoing by powerful individuals, it is also advancing a triumvirate of draft laws that could give the state sweeping powers over citizens, organisations and dissent in the present and future. The draft Prevention of Terrorism legislation, the Prevention of Organised Crimes Bill and the NGO Registration and Supervision Bill raise serious questions about the over-centralisation of power. Each of these laws strengthens the powers of the state while weakening the rights and safeguards that protect people from their misuse and thus questions the basic rights of people in democracy where ‘the power of the people is vested in the government’. This is a recipe for future misrule rather than the rule of law. As the well-known saying goes, power corrupts and absolute power corrupts absolutely.

Proposed Laws

The real test of system change, for which the government obtained an overwhelming mandate, requires not only a government willing to hold others accountable, but one prepared to subject itself to the same principles of legality, transparency and restraint. The three proposed laws that are particularly important in this regard are the Protection of the State from Terrorism Bill, the Prevention of Organised Crimes Bill and the NGO Registration and Supervision Bill. Each of these draft laws has been presented as serving a legitimate purpose. Preventing terrorism, combating organised crime and ensuring that NGOs do not facilitate money laundering or terrorist financing are proper responsibilities of the state. Sri Lanka has international obligations in these areas, and no responsible government can disregard them. However, the existence of a legitimate objective does not justify every means adopted to achieve it.

The proposed Protection of the State from Terrorism Bill illustrates the problem. Although its definition of terrorism draws on a model developed by a former United Nations Special Rapporteur, the Human Rights Commission of Sri Lanka has warned that the definition of terrorism extends beyond the model and could bring legitimate political protest, trade union action and civil disobedience within the scope of counter-terrorism legislation. Its concerns also include prolonged detention, inadequate judicial oversight and restrictions on access to legal counsel. These are objections that go to the heart of the relationship between the citizen and the state. The government cannot credibly promise to protect democratic freedoms while creating powers that could be used to restrict them. It is necessary for the government to reassess the draft through transparent consultation and revise provisions that could criminalise legitimate dissent.

The Prevention of Organised Crimes Bill raises similar concerns. It is presented as giving effect to the United Nations Convention against Transnational Organised Crime, which Sri Lanka ratified in 2006. The Centre for Policy Alternatives (CPA) has argued that the convention does not require many of the bill’s provisions. The proposed law extends to a broad range of offences, permits detention orders lasting up to a year, makes confessions to police admissible for purposes of legal evidence, and introduces extensive surveillance powers. A law intended to dismantle criminal networks should not create a parallel system of exceptional powers that could be applied far beyond organised crime. Nor should safeguards developed through years of experience with abuses under the Prevention of Terrorism Act be weakened through legislation bearing a different name. The government should review whether or not existing laws could be used effectively to control these crimes or whether each exceptional power is necessary.

Civil Society

The proposed NGO Registration and Supervision Bill presents another test of the government’s intentions. The government may reasonably seek transparency in the finances of organisations receiving public or foreign funds, including measures to prevent money laundering and terrorist financing. It seeks to justify its overreach on the grounds of meeting the internationally mandated requirements of the Financial Action Task Force (FATF) for the Asia-Pacific region. But these objectives do not justify placing civil society and NGOs under excessive administrative control when even the FATF ranks them as low to medium risks. The draft bill would require registration and renewal, impose extensive obligations on organisations and empower authorities to suspend or deregister them on broadly framed grounds. It is important to redraft provisions that confer excessive discretion over registration, renewal, suspension and deregistration of NGOs.

Among the concerns raised by United Nations human rights special rapporteurs with regard to the draft NGO law are provisions requiring organisations to align with government policies and restrictions that could affect advocacy, dissent and freedom of association. The implications extend well beyond organisations that engage directly with the government. Community groups, human rights organisations, independent researchers and organisations working on reconciliation or accountability could find their activities constrained by uncertainty over how these provisions might be interpreted. Organisations that criticise government policies are not thereby working against the country. Their freedom to do so is part of what distinguishes a democracy from a system in which the government determines which opinions and activities are acceptable.

The government has generated considerable public goodwill through its pursuit of corruption and criminality. It should not assume that this goodwill gives it an unlimited mandate to strengthen the coercive powers of the state. The NPP knows from its own history that governments can treat dissent as a threat and use the machinery of the state against their opponents. There is still time to correct the drafts through transparent public consultation, narrow definitions of offences, meaningful judicial control over detention and surveillance, and effective remedies against arbitrary decisions. A government that pursues corruption while weakening safeguards against state abuse risks undermining its own achievements. Besides bringing to light the abuse of power by previous governments, the NPP government needs to build a system in which no future government can abuse power in the belief they can get away with it.

Features

Quality assurance without quality enhancement: The irony of university QA

Published

1 hour ago

2026/10/13

Sahan Weerasooriya

By Ramya Kumar

According to the Quality Assurance Council (QAC) of the University Grants Commission (UGC), quality assurance (QA) refers to “the means (i.e. the policies, attitudes, actions, procedures, etc.), by which an institution can guarantee with confidence and certainty, that the standards and quality of its educational provision are being maintained and enhanced”.

An expansive structure has been in place since 2005 to govern and implement QA processes within the state university system. The QAC is the focal point at the UGC that implements external reviews of state universities and institutes. Each university has its own Centre for Quality Assurance (CQA) tasked with performing QA in line with QAC directives. Faculties, in turn, have Internal Quality Assurance Cells (IQAC) performing their own QA; they are answerable to the CQA.

The big question is whether this all-encompassing top-down QA system, that in many ways undermines the internal dynamics of university governance, actually supports universities to enhance the quality of education. This article highlights some concerns.

Top-down check-box activities

The QAC conducts external reviews of universities and degree programmes. A review team appointed by the UGC (who may or may not have experience in the institution/programme in question) examines the self-evaluation report submitted by the said institution/programme. The team then conducts a site visit to verify the claims made in the university’s self-evaluation report, clarify issues identified during the desk review, and examine how QA procedures operate in practice. The team holds meetings with the university administration, members of the Council and Senate, Deans, Heads of Departments, academic and non-academic staff, students, and others. Following the visit, a draft report is submitted to the relevant institution/programme for comment before final publication. The reviewed institution/programme then prepares and publishes an action plan addressing the recommendations, with subsequent monitoring of progress.

There are some worthy QA initiatives under implementation, such as improving facilities for students with disabilities and strengthening mechanisms to address sexual- and gender-based violence. However, for the most part, QA activities have little to do with improving the quality of education. They are mostly preoccupied with monitoring faculty and department websites, digital transformation, student feedback, subject evaluation, course evaluation, peer evaluation, and, more recently, staff appraisal. These activities, which consume an inordinate amount of time—so precious at understaffed universities—have become check-box activities completed to generate evidence for the next review. Below is an excerpt of a conversation between two academics (1 and 2) that conveys how QA plays out at universities (reproduced with permission).

1: … .it’s like social media you know, like posting things on Facebook or twitter or Instagram. When people do a lot of social media, everything they do, they do thinking, “okay I’m going to post it in this way… this I have to put on my Instagram.” QA is a little like that… everything is considered in light of, “ah we can use this for the review, as evidence… for example very recently we were encouraged to have all the things that we do in our department in the faculty newsletter so then they can put in the review. Every little thing has to be noted down….

2: And with pictures and all…

1: At the very least it has to be written so that you have written evidence .. you can’t be doing something for the sake of doing something or because it is good for the department … and sometimes people tell me “oh yea that’s a good idea we can fit that under this x, y section of the review..”

2: Yea, and nobody really thinks about the actual outcome… whether it’s actually helping anyone..

1: I also find that a lot of the words that we used in different ways have now been co-opted to the QA discourse ..including quality.. I can’t actually say what I want as an “outcome”, for example, that the outcome of this workshop is that my students “think about” … then I am told “ah but no that’s not one of the Bloom’s taxonomy words, “think about”.…

2: And the worst part is these medical and agriculture people, these types of people go around spreading it like some kind of gospel!

1: Yea, this cookie cutter way of doing things, they think is the height of innovativeness or creativity, when actually it is so mundane … for me the most awful thing about it is like some fungus of mundanity has taken over through QA reviews.

2: yea, when you say QA, my mind closes off immediately and I stop listening…

Auditing everything but power

QA leaves out crucial aspects of university governance. For instance, there is no review or assessment of the “quality” of university administrations under Criterion 1 or the integrity of procedures governing the promotion of academic staff under Criterion 6 of the institutional reviews.

The majority in the Council—the university’s executive and governing body, which is responsible for selecting the Vice-Chancellor (VC)—are appointed in ad hoc fashion. Apart from the Ex-Officio members in the Council (VC, Deans, etc.), and the two members elected by the Senate, the remainder are appointed by the UGC with no formal consultation or vetting procedure. The VC appointment process described in UGC Circular No. 03/2023 exemplifies how an ostensibly technical process can become entangled in political sycophancy. The Registrar invites applications for the position of VC through advertisement. Applicants must submit a curriculum vitae, a statement of vision for the university and supporting documents. The University Council appoints a three-member Search Committee of senior academics to encourage “eminent persons” to apply, while the UGC appoints a former VC from another university to “observe” the selection process.

A Special Meeting of the University Council is convened. Candidates are interviewed and must make a presentation to the Council Members, followed by questions. Each Council member “gives marks” for seven prescribed criteria: strategic focus (20%), effective leadership (20%), holistic thinking/conceptual skills (10%), academic and research excellence (15%), personal integrity (10%), professional communication (10%) and managerial competence (15%). Marks are averaged, and the Council recommends three candidates to the UGC in rank order. The UGC-appointed observer separately submits a confidential report on the selection process.

This procedure is expected to guarantee quality, but does it? Applications are submitted to the Council Members, who have been appointed on questionable bases, and who are expected to review the applications and give scores, based on objective assessments. But, in reality, most Council Members are manipulated by VC candidates, who often have personal ties with them. The UGC-appointed observer usually has no genuine interest in the outcome. And there is no way for anyone to actually question the Council’s decision once it is made. Although the highest-ranked candidate may ultimately be appointed, the selection remains a political decision made by the President, who retains the discretion to appoint any one of the three.

External reviews also do not look into the promotions of academic staff, except to scrutinise whether there are policies and procedures in place to govern promotion. Academic staff may apply for promotion to Professor once they satisfy the prescribed eligibility requirements, which typically include the period of service, academic qualifications, research and publication achievements, teaching experience, and contributions to the university and wider community. Applications are evaluated against specified criteria, with research output and academic contributions assessed through documentary evidence and expert evaluation. Under the UGC’s scheme for Professors, two experts from outside the applicant’s institution assess specified aspects of research and knowledge dissemination. Again, beneath this technical process, which is externally evaluated, lies a problematic points-based scheme that can be manipulated and abused with impunity.

Rethinking university QA

Like the VC election process and the schemes of promotion for academic staff, QA reviews are open to manipulation. Before a review, there is a chaotic rush to complete evidence gathering and reporting. Academics leave all other work aside, including at times their teaching, to focus on completing documentation and preparing reports. The standardised criteria in the review manuals and scoring sheets often do not reflect differences in disciplines and institutional contexts. But this does not really matter because any serious problems experienced by institutions or programmes are hastily brushed under the carpet to conceal any evidence that could taint the review. The goal is to obtain an A or at least a B grade at whatever cost.

QA may result in positive change if it moves beyond top-down check-box activities towards internally designed and owned processes encompassing all aspects of university governance, led by departments and faculties, and supported by adequate resources. The current QA system needs to be dismantled and replaced by procedures that are accountable, not to the UGC, but to our students and the communities we serve.

(Ramya Kumar is attached to the Department of Community and Family Medicine, Faculty of Medicine, University of Jaffna)

. Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.

Features

Down Memory Lane — the Grand 20th Edition!

Published

1 hour ago

2026/10/13

Sahan Weerasooriya

Down Memory Lane: Ready to sing again

Yes, Down Memory Lane, the beloved Sing-Along concert series that first struck a chord, way back in 1997, returns for its landmark 20th edition this Saturday, 17th October, at the beautiful Bolgoda Grand Resort, Moratuwa town centre.

Having celebrated its glorious 25th anniversary with the show in 2023, this milestone 20th concert promises to be even more special.

The organisers, the ever-popular Moratuwa Arts Forum, are pulling out all the stops to present yet another unforgettable evening, brimming with camaraderie, fellowship, and pure nostalgia.

Get ready for two-and-a-half hours of non-stop singing as veteran vocalists, from the Moratuwa Arts Forum, will take the stage to lead and inspire the happy audience to sing, sing and sing to their hearts’ content.

The repertoire? Absolutely magical, according to the organisers.

Veteran Arun Dias Bandaranaike: Will handle the evening’s proceedings / Priya Peiris: Event Conceptor

Around 40 golden oldies — from timeless English vintage evergreens and hits from the 50s to the 90s, to toe-tapping calypsos, soulful American plantation melodies, rousing cowboy and Dixieland favourites, aa well as cherished Sinhala standards. All to be sung with much gusto!

This year’s dedicated organising committee comprises Brian Coorey (Chairman), Priya Peiris (Event Conceptor), Hiran Fernando, Suranga Fernando, Viranjan Perera, Hemka Fernando and Neelesh Silva. Guidance and support comes from Moratuwa Arts Forum President Sarana Guneratne and Secretary Chandani Silva.

Adding his signature charm to the evening, as Master of Ceremonies, will be the veteran Arun Dias Bandaranaike.

Don’t miss this landmark celebration of music and memories!

For further details, contact Hiran Fernando on 0772636446 or WhatsApp 0783636446.