SJB says a state bank on verge of default

by Saman Indrajith

SJB Colombo District MP Dr. Harsha de Silva told Parliament yesterday that a state bank was on the verge of default.

Participating in the debate on the Value Added Tax (Amendment) Bill, to increase the tax on financial services from 15 to 18 per cent, the MP said that he had been informed that a state bank was on the verge of default, and added that the House should look into the matter immediately.

“Three months ago I warned that they were involved in the Buy-Sell-Swap scheme. There was a rule that the dollar could NOT be sold above Rs. 200,” he said, adding as a result banks had to purchase dollars on a negative premium.

The MP said that State Banks had purchased dollars for Rs. 200 promising to sell them back in three months for a mere Rs.185, adding that the move to purchase on a negative premium would result in the collapse of the entire banking system.

“If what is happening is true, it is the beginning of a disaster,” he said, adding that it was the people’s money that was placed in a crisis situation.

Dr. De Silva demanded to know the meaning of the existence of parliament if Ministers were not present to respond to the concerns of the members of the house.

The Finance Minister had not been seen in Parliament for three months, and the Governor of the Central Bank had also disregarded the notices given by Parliament, de Silva said, noting that the Central Bank Governor and the Monetary Board had been instructed by the Committee on Public Finance to appear before the committee to discuss the VAT increases, but they had disregarded the notice. “This is an insult to Parliament,” MP Dr De Silva said.

He said Parliament was Supreme when it came to any democratic matter and Public Finance.

The Colombo District MP found fault with the Central Bank Governor and the Monetary Board comprising Rani Jayamaha, Samantha Kumarasinghe, and Sanjeewa Jayawardena, PC for their failure to make an appearance before the Committee on Public Finance.

“The failure of Nivard Cabraal and his group to be present at the Committee on Public Finance is a blatant disregard of parliamentary traditions. No one has a right to do that. If that is the case, why do we need a parliament?”