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Parate execution is the last resort to protect depositors’ funds – SLBA

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Banks exercise their legally-enshrined right to Parate Execution as a last resort and the overarching objective is the protection of depositors’ funds that have been lent to borrowers, the Sri Lanka Banks Association (SLBA) has said in a statement to the media.

Responding to what it termed as lobbying by a group of defaulting borrowers espousing the removal or weakening of the protection of depositors’ funds, the Association said the Parate Execution remedy is aimed at recovering mortgaged assets from wilful defaulters and businesses that are no longer viable.

The SLBA, which represents all the licensed banks in the country, emphasized that banks have extended moratoriums on debt repayment for a long period exceeding 48 months in some cases, and that in instances of wilful default by borrowers, the banks owe a duty to their depositors’ whose funds are at risk, to recover the debts overdue and minimize the losses on loans granted.

The Association pointed out that the funds used to grant loans are placed with the banks by their depositors and that depositors are paid interest out of the interest charged from loans granted  to borrowers. “Banks are responsible to manage this intermediary role in a very careful manner to avoid deterioration of depositor confidence which can lead to many negative economic consequences,” the SLBA statement said.

“When borrowers face difficulties in repayment, the lending banks review the causes for the inability to repay interest and/or capital, and assess how the situation needs to be remedied to restore the borrower to being able to repay loans and carry on business/economic activity,” the SLBA said. “In such instances it is common for the banks to exercise empathy as a “partner” and assist the borrowers to come out of their challenging financial situation, and it is common for the banks to consider extension of loans, provide moratoriums, consider interest concessions and restructure the loans to suit the future cash flows of the employment or the business.

Banks take this course as the preferred alternative to liquidating the assets of the borrower under loan security arrangements. This is because it is beneficial for the customer as well as the bank to revive a business to good financial health than to shut it down and take whatever residual value is left, which in majority of cases is less than the value of the amounts due to the bank and kills the economic activity that was being financed. The banks therefore take the option of a win-win for all and support the borrowers when they face difficulties.”

“When assessing the condition of the overdue loans and their ability to be revived, banks have to accept that certain cases are beyond revival and/or that the default is wilful and in fraud of the lender. In these limited circumstances banks as responsible financial intermediaries must necessarily invoke the remedies available under the law and this includes ‘Parate Execution’ which is a measure to protect the depositors’ funds from wilful defaulters.”

The Association explained that: “As a natural consequence of investing in a business, a businessman may encounter strains principally on his ability to repay loans that cannot be sustained by bank depositor’s funds i.e. bank financing alone. A decline in the economy as in Sri Lanka due to social and political disturbances, pandemic conditions and an overwhelming public debt burden can also cause businesses to fail.

There has been governmental and external institutional aid to tide over these difficult times but the main reliance has been on the banks that have extended moratoriums on debt repayment for a long period, exceeding 48 months in some cases. The banks provide concessions and interest waivers during these difficult times to borrowers while maintaining interest payments to depositors to maintain confidence.”

“All should acknowledge the fact that the banks, guided by the Central Bank of Sri Lanka, extended their fullest support to weather a very challenging period from the Easter Sunday attacks to the pandemic, and the economic crisis that followed.”

“Parate Execution against assets securing bank debt (depositors’ funds) is the last resort. This is when all efforts at resolution of borrower’s insolvency are met with refusal to review/negotiate, usually by malicious abuse of judicial proceedings which is a common dilatory tactic.”

“It now appears that a group of defaulting borrowers in various sectors have engaged lobbyists of varying degrees of influence to espouse the removal/weakening of the protection of depositors’ funds from wilful value destruction by owners of non-viable businesses where repayment delays are deliberate.”

“Therefore, the banks wish to state the position in relation to reliefs claimed by the borrowers and the cost to the depositors who provide the funds, if recovery actions are taken away:

* Banks are always open to have one-on-one discussions with any borrower who has faced difficulties in meeting debt obligations to have alternative options for loan repayments. This is in the best interest of all stakeholders.

* If there is no source of repayment, postponing recovery action will not solve the issue and ultimately the depositors’ funds will not be returned to the banks.

* The Parate Execution remedy is aimed at recovering mortgaged assets from wilful defaulters/businesses that are no longer viable.

* The overarching objective is to protect depositors’ funds that have been lent to wilful defaulters/ borrowers.

* Depositors’ confidence is of paramount importance for economic growth which is much needed in the Sri Lankan context.

* If Parate Rights are taken away, banks will be compelled to be extremely selective in lending and the availability of finance will be to a narrowing segment of entrepreneurs, resulting in credit to the private sector shrinking, contrary to Government and regulatory policies.



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Power sector overhaul targets losses, debt and tariffs

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Independent trade unions cry foul

The government has launched a far-reaching overhaul of the electricity industry, breaking up the Ceylon Electricity Board (CEB) into six fully state-owned companies, claiming to rein in chronic losses and mounting debt.

Under the Preliminary Transfer Plan, the newly incorporated entities, namely, Electricity Generation Lanka (Pvt) Ltd (EGL), National Transmission Network Service Provider (Pvt) Ltd (NTNSP), National System Operator (Pvt) Ltd (NSO), Electricity Distribution Lanka (Pvt) Ltd (EDL), CEB Employees Funds (Pvt) Ltd (CEBEF) and Energy Ventures Lanka (Pvt) Ltd (EVL), will take over the assets, liabilities and operations of the CEB from the appointed date.

Independent trade unions have opposed the restructuring programme.

At the core of the new model is the creation of an independent National System Operator, which will handle power system planning and competitively procure electricity from Electricity Generation Lanka, Independent Power Producers and non-conventional renewable energy developers. Power will be wheeled through the national grid operated by the NTNSP and sold to distribution companies.

Explaining the economic rationale, Eng. Pubudu Niroshan Hedigallage said the separation of functions was critical to restoring cost discipline in the sector.

“Electricity planning and procurement will now be carried out independently, based on least-cost principles. That is essential if we are to control generation costs and ease the upward pressure on tariffs,” he said.

Electricity Generation Lanka, though a successor to the CEB, will compete with private and renewable energy producers for projects, a move expected to curb inefficiencies and end guaranteed returns enjoyed under earlier arrangements.

“There will be no automatic allocation of projects. EGL must compete in the market like any other generator,” Eng. Hedigallage said.

According to officials, the Preliminary Transfer Plan provides for one generation and one distribution company initially, with further unbundling planned under the Final Transfer Plan to introduce sharper financial accountability at operational level.

Economists note that the restructuring is closely watched by multilateral lenders and investors, who have repeatedly flagged the power sector as a major fiscal risk.

The government has insisted that the reforms do not amount to privatisation, stressing that all six entities remain 100 percent state-owned. However, independent trade unions are of the view that what the government has undertaken is divestiture in all but name.

By Ifham Nizam

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India, Sri Lanka speakers discuss technology-driven parliamentary innovation, including AI-enabled systems

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Indian and Sri Lankan delegations meet in New Delhi (pic courtesy IHC)

Speaker of Lok Sabha Om Birla and Sri Lankan Speaker (Dr.) Jagath Wickramaratne recently discussed the possibility of expanding parliamentary cooperation through regular exchanges, formation of friendship groups, collaboration in policy and programme design and deeper engagement in technology-driven parliamentary innovation, including AI-enabled systems, real-time multilingual translation, and capacity building through Parliamentary Research and Training Institute for Democracies (PRIDE).

The discussion took place on the sidelines of the 28th Conference of Speakers and Presiding Officers of the Commonwealth (CSPOC) held in New Delhi recently.

The following is the text of the statement issued by the Indian High Commission in Colombo: ” Speaker of the Parliament of Sri Lanka (Dr.) Jagath Wickramaratne concluded his visit to India from 14-18 January 2026, for participation in the 28th Conference of Speakers and Presiding Officers of the Commonwealth (CSPOC) held in New Delhi. This was his first visit to India after assuming office. He was accompanied by Secretary-General of Parliament Kushani Rohanadeera and Assistant Director, (Administration) of the Parliament of Sri Lanka Kanchana Ruchitha Herath. Following the 28th CSPOC from 14-16 January 2026, Speaker and his delegation visited Jaipur, Rajasthan as a part of a two-day tour for CSPOC delegates from 17-18 January 2026.

The 28th CSPOC was inaugurated by Prime Minister of India Narendra Modi on 15 January 2026 at the Central Hall of Samvidhan Sadan, Parliament House Complex, New Delhi. Welcoming parliamentary leaders from across the Commonwealth, Prime Minister Modi highlighted the success of Indian democracy in providing stability, speed, and scale. He shared India’s efforts at giving voice to the Global South and forging new paths of cooperation to co-develop innovation ecosystems. He underlined the use of Artificial Intelligence by the Parliament of India to attract youth to understand Parliament. Prime Minister expressed his confidence in the CSPOC platform for exploring ways to promote knowledge and understanding of parliamentary democracy.

The conference, chaired by Lok Sabha Speaker Om Birla, convened 44 Speakers and 15 Deputy Speakers from 41 Commonwealth countries, along with representatives of four semi-autonomous Parliaments. The theme of the conference was “Effective Delivery of Parliamentary Democracy.” During the conference, participants addressed the role of Speakers in reinforcing democratic institutions, the integration of artificial intelligence in Parliamentary functions, the influence of social media on Members, approaches to enhance public engagement with Parliament, and measures to ensure the security, health, and wellbeing of Members and Parliamentary staff.

The visit marked a significant milestone in the evolving parliamentary partnership between India and Sri Lanka. Last year, two Parliamentary Delegations visited India for Orientation Programmes in May 2025 and August 2025 respectively. These visits, in line with the intent of the India – Sri Lanka Joint Statement on ‘Fostering Partnerships for a Shared Future’, further reinforce the strong democratic ethos and enduring friendship shared between the two nations.”

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Pakistan HC celebrates academic achievements of Lankan graduates

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A section of the participants at the Pakistan HC event

The High Commissioner of Pakistan in Sri Lanka hosted a special reception on Friday (16) for Sri Lankan alumni who have recently returned from their studies in Pakistan. The event, held at the Pakistan High Commission, celebrated the academic achievements of the graduates and reinforced the deep-rooted educational ties between the two nations.

The Allama Iqbal Scholarship Programme, a flagship initiative launched in 2019, has become a vital pillar of bilateral cooperation. The High Commissioner highlighted that Pakistan offers 1,000 fully funded scholarships at graduate, postgraduate, and PhD levels, with over 500 Sri Lankan students currently pursuing their education in Pakistan’s premier universities.

“Sri Lanka and Pakistan share an enduring friendship rooted in a shared history of mutual respect and culture,” the High Commissioner remarked during the address. “Education is the key to unlocking the success of your brilliant futures and creating bonds that extend well beyond the classroom”.

Addressing the alumni as “custodians” of a noble cause, the High Commissioner urged the alumni to act as brand ambassadors by sharing their knowledge to guide deserving students toward academic opportunities in Pakistan.

He emphasised their responsibility to mentor young minds, ensuring no capable student misses the chance for a promising future. Furthermore, the alumni were encouraged to take an active role in organising frequent educational and cultural engagements to inspire and enlighten others while strengthening the ties between the two nations.

The High Commissioner emphasized that each graduate serves as a “bridge” between the two countries, playing a meaningful role in uplifting Sri Lanka while further strengthening Pakistan–Sri Lanka relations. The alumni were invited to remain closely connected with the High Commission to facilitate future initiatives that strengthen people-to-people ties.

The evening concluded with a traditional Pakistani dinner, where the alumni shared stories of their academic growth and cultural experiences in Pakistan in a spirit of friendship and togetherness.

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