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‘Organised defaulters’ may make bank loans harder for genuine businesses

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Dr. Nandalal Weerasinghe

By Sanath Nanayakkare

Officials of the Central Bank have to grapple with ‘growth versus inflation’ dynamics to determine Sri Lanka’s economic future in another challenging New Year which has just begun. In addition to that they have found another unenviable task in encountering vociferous opponents of the banking system’s parate execution which is apparently being enforced as a last resort.

This was evident during the Q& A session the media had with Central Bank Governor Dr. Nandalal Weerasinghe on Friday where the Bank released its first-ever Financial Stability Review after gaining independence from Sri Lanka’s elected officials.

“A handful of organized loan defaulters are engaged in a vociferous campaign these days to avoid repaying loans they have taken from the banking system. But the Central Bank has a duty to recover the depositors’ money which has been lent to them, or else, the banks may become reluctant to loan money to even good borrowers in the future”, Dr. Weerasinghe warned.

“The Central Bank’s view is that parate execution is more important and essential for the protection of depositors’ money than for the stability of the banking system. The banking system distributes deposit funds of the general public among businesses as loans to stimulate the economy. However, when one borrows money from that deposit base and not repay it, the depositor’s money is at risk,” he said.

The Governor pointed out that the entire banking system has a deposit base of Rs. 16 trillion and depositors’ money account for 81% of the banking system’s liabilities.

“Bank shareholders have only a stake of 7% in this deposit base. So if any borrowers say that the money they have borrowed can’t be repaid or shouldn’t be recovered under parate execution, it is an unjustifiable claim. Now we hear the voices of an organized group that have the capacity to afford formal media events and say their defaulted loans shouldn’t be recovered under parate execution. This is akin to telling the depositors that ‘we have borrowed your money but we can’t pay it back.” If the depositors agree to that, it’s justifiable.

But the depositors won’t agree to that. The depositors are a silent majority community and their voices are not heard. Parate execution is enforced only when borrowers default on their loans; it is not enforced on those who make suitable arrangements to repay their loans. When the banks can’t recoup its losses under parate execution; they would be reluctant to give loans in the future even if one provides a property as collateral for repayment. So, the Central Bank has a responsibility to recover the money that belongs to the general public. If anyone is trying to disrupt the process, it’s a violation of depositors’ rights,” he said.

The governor pointed out that mainly short term deposits are used in giving long term loans and in the past 11 months, parate execution has been enforced on 557 persons recovering Rs. 38 billion.

“At a glance, it appears to be a big sum of money. But that is only 0.4% of the total bank loan portfolio. At present Stage-3 impaired loans stand at 13% which is a sum of Rs.1.4 trillion. Out of Rs. 1.4 trillion worth impaired loans, Rs. 38 billion came from parate executions. This means only 2.7% has been recovered under parate executions. If the banking system finds it unable to keep the enforcement of parate execution in effect, it will be a great injustice to the depositors because their money is borrowed and not repaid. Also, it will be an injustice to potential genuine borrowers because banks will be reluctant to give them money on credit.”

“These days you hear the voice of defaulters who make statements against parate execution at media events they have organized. And you will only see the depositors come to the picture when they find their savings are used in messy transactions. ETI, Golden Key and The Finance are good examples for this where depositors finally grouped up to make their collective voice heard. So, if the savings of millions of innocent people are misapplied by a handful of people and if they band together to prevent parate execution from being enforced, I think it would be great injustice.”

“The economic crisis brought its consequences without sparing anyone; not only borrowers, depositors were affected too. When inflation was 70%, depositors got a maximum interest rate of about 25%. That is how borrowers had to pay 30% interest rate. The Central Bank has issued 8 circulars with effect to giving crisis-hit businesses necessary moratoriums, relief measures, spreading out repayments, SME loans from ADB etc. And if the borrowers still have any grievances against their respective banks, there is a separate unit at the Central Bank to discuss such issues and see if a particular bank is deviating from the given norms.”

“But if it is identified that someone is shirking repayments, it is our duty to recover that money on behalf of the depositors and taxpayers because in the event of a crisis in the banking system, it will need to be borne by taxpayers and depositors,” he said.

The Governor went on to defend the banks making a decent profit through the activity of deposit taking, deposit interest payments and lending money at market rates throughout a financial year while robustly supporting the economy.

“When a bank makes profits, it has more capital to give as loans. That is why Rs. 450 bn has been allocated by the Budget from taxpayers’ money to strengthen the capital position of the state banks”, he pointed out.

The Governor urged sections of the media to not only highlight the story of the loan defaulters but also to train their cameras at the depositors and taxpayers.

“Are taxpayers willing to pay more taxes to give relief to a handful of loan defaulters or are depositors willing to sacrifice their funds to give relief to loan defaulters? That is the fundamental question we have before us and the general public needs to be made aware of it,” the Governor said.



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World Bank puts USD 110m into climate-resilient road rebuilding

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A Cyclone Ditwah-damaged area in Sri Lanka.

By Ifham Nizam

The World Bank has approved USD 110 million in additional financing to rebuild around 600 kilometres of roads damaged by Cyclone Ditwah, with the investment aimed not merely at restoring connectivity but at making critical transport infrastructure more resilient to future climate shocks.

The financing comes against a much larger recovery requirement for the transport sector, estimated at USD 1.31 billion, highlighting the scale of the infrastructure challenge following one of the most destructive weather disasters to hit the country in recent years.

The World Bank said the additional financing, provided through the International Development Association (IDA) Crisis Response Window, would support road reconstruction incorporating improved drainage, landslide protection and upgraded engineering standards.

‘Cyclone Ditwah has had a devastating impact on connectivity across Sri Lanka, but rebuilding also gives us an opportunity to build back stronger, said Gevorg Sargsyan, World Bank Group Country Manager for Sri Lanka and Maldives.

The World Bank said the programme would go beyond repairing damaged roads, helping reconnect farmers with markets, communities with essential services and households with economic opportunities.

The additional financing will extend the Inclusive Connectivity and Development Project (ICDP) by three years, taking total World Bank transport investment under the operation to USD 610 million.

The World Bank’s December 2025 GRADE assessment estimated Cyclone Ditwah had caused USD 4.1 billion in direct physical damage, equivalent to around four percent of GDP. Infrastructure accounted for approximately USD 1.735 billion, or 42% of the total, with roads, bridges, railways and water systems among the heavily affected assets.

The Bank has stressed that the USD 4.1 billion estimate measures direct physical damage and does not include income or production losses or the full cost of recovery and reconstruction.

The transport sector alone suffered extensive disruption, making the rebuilding of road networks a critical component of the broader economic recovery.

The latest USD 110 million package is expected to directly benefit more than 830,000 people, while nearly two million people across eight districts are expected to benefit from improved connectivity.

The programme is also expected to support employment during reconstruction and improve market access for approximately 22,000 tea, vegetable and paddy farmers.

The World Bank’s intervention therefore combines immediate disaster recovery with a longer-term infrastructure objective: ensuring that money spent on reconstruction does not simply restore roads to their pre-disaster condition but reduces their vulnerability to the next extreme-weather event.

That approach is becoming increasingly important as climate-related disasters place additional pressure on already constrained public finances.

Rebuilding the same infrastructure repeatedly after floods, landslides and other disasters carries a significant economic cost, making resilience an increasingly important part of infrastructure investment decisions.

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SLIC Life offers Rs.1million free life cover to parents of children born on World Children’s Day 2026

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Senior Management of SLIC Life and officials of Castle Street Hospital for Women symbolically handing over a Free Life Cover of Rs. 1 million to a parent whose child was born on 1st of October 2026

In celebration of World Children’s Day 2026, Sri Lanka Insurance Life (SLIC Life) has once again extended a Rs. 1 million free life insurance cover to the parents of every child born on 1 October 2026, across Sri Lanka. Now in its fifth consecutive year, the initiative was implemented island-wide, covering hospitals across the country and enabling parents of newborns to benefit from this special offering.

Beyond providing financial protection, the initiative seeks to highlight the importance of planning for a family’s financial security from the very beginning of a child’s life.

“The birth of a child marks the beginning of a new journey filled with hopes, dreams and aspirations. At SLIC Life, we believe that protection should begin from the very start of that journey. Through this initiative, we aim to create greater awareness of the importance of planning ahead and the role life insurance can play in safeguarding families against life’s uncertainties. As we continue this initiative for the fifth consecutive year, we remain committed to extending meaningful protection to Sri Lankan families and contributing towards a more secure future for the next generation,” said Dr. Sameera Dharmasena, Chief Executive Officer of SLIC Life.

Launched in 2022 as part of SLIC Life’s Corporate Social Responsibility (CSR) programme, the World Children’s Day initiative was introduced with the aim of supporting parents and strengthening financial security for families at an important stage in their lives. Over the years, the initiative has become a significant part of SLIC Life’s annual CSR calendar, reflecting the company’s broader commitment to children, families and communities.

SLIC Life’s commitment to children and education extends across several long standing CSR initiatives. The ‘Pasal Piriyatha Surakimu’ programme, launched in 2007, has benefited over 3,365 underprivileged schools through initiatives including classroom refurbishments, water facilities, libraries and learning resources. The 2026 edition of the programme is scheduled to be carried out in November, continuing SLIC Life’s efforts to enhance learning environments for children across the country. Complementing this, the ‘Suba Pathum Scholarship Programme’, which has been conducted since 2014, has now awarded 2,425 scholarships valued at Rs. 265 million to children of policyholders who demonstrate excellence in national examinations. The programme reflects SLIC Life’s continued focus on supporting educational aspirations and creating opportunities for the next generation.

Children remain at the heart of SLIC Life’s commitment to building a more secure future. Through the annual World Children’s Day initiative and its wider CSR programmes, SLIC Life continues to demonstrate that the value of insurance extends beyond financial protection, contributing to stronger and more resilient families and communities.

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HelpAge thanks donors for helping in carrying out free cataract surgery program

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A surgery in progress under the aegis Helpage.

At a recent seminar HelpAge Sri Lanka (HASL) thanked local and foreign donors for strengthening the on-going free cataract surgeries program conducted by HelpAge Eye Hospital, Wellawatta for less- privileged elders over 55 years.

According to HelpAge Eye Hospital statistics the free cataract surgery programme was commenced in 2002 and over 55,000 surgeries have so far been performed for elderly citizens.

Head of HelpAge Eye Hospital Mahanama Wijesinghe said needy persons over 55 years of age could contact the hospital on telephone numbers 0112555759 and 0112589450 for free cataract surgeries.

‘Steps have been taken to conduct surgeries within a short duration of 30 days after attending the Eye Hospital clinic, he said.

Wijesinghe thanked all donors for their donations towards helping underprivileged citizens of the country.

HelpAge, Executive Director Dr. Harsha Bandara said HelpAge also conducts free medical and eye camps for needy elders and thanked donors for their donations towards this meritorious cause.

He requested philanthropists and donors to make their contributions for the sake of the needy.

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