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Millionaires are the biggest loan defaulters in Lanka
Sunday, 18 May 2008 - 1:54 PM SL Time
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The biggest loan defaulters in Sri Lanka are the rich millionaires in Colombo and not the poor peasants in rural areas. The Bank of Ceylon (BoC) does not ask farmers to mortgage their land as collateral to obtain agricultural loans and there are other ways we ensure the security of loans, said BoC Chairman Dr. Gamini Wickramasinghe.
Dr. Wickramasinghe was addressing an international seminar on micro finance on Bank linkages in enhancing access to rural finance in Sri Lanka organised by the World Bank in collaboration with the Gemidiriya Foundation.
In agricultural insurance we are strict on crop insurance and the loans are released on a personal or collective guarantee of small groups. In the event of any crop destruction, the farmer gets compensation from the Agriculture Insurance Board and the bank is flexible to restructure the loan.
However, of the 1.2 million farmers in the country only 50,000 make use of the financial assistance provided by banks under the new comprehensive rural credit scheme where the interest rate is 8%.
Around 96% of the farmers still depend on the informal financial sector where money lenders charge 6% - 15% interest per month, he said.
Representatives from African countries said that the main issue in rural finance schemes in their countries is collateral.
In response Dr. Wickramasinghe said that various factors contribute to the success of rural finance schemes in Sri Lanka and low default rates.
High literacy rate, awareness programs on educational workshops, newspaper articles, TV and radio programs as well as ethics and values promoted by banks on the banking and credit system have contributed to its success.
We have also focused on promoting subjects such as banking, insurance and capital markets, he said.
The BoC s over 30 years experience has also contributed to the success of our rural finance projects. The BoC, a rural bank has 304 branches. We know the realities of suburban and rural life. At present the BoC implements around 35 special credit schemes to meet the financial needs of the varied rural communities, he said.
Dr. Wickramasinghe said that the Gemidiriya micro finance scheme is highly successful and the 98% recovery rate is the highest in the country. The highly participatory decision making process has led to better targeting of the poor. It has improved governance, transparency and accountability at village level.
The BoC is closely associated with the Gemidiriya and provides financial assistance to village organisations and small groups with good track records in loan repayment.
The BoC issued loans recently to selected members of Gemidiriya village organisations in the Badulla district to purchase paddy.
This led to an increase in prices in the open market, for paddy in the area and the farmers benefited.
The Gemidiriya People s companies encouraged businesses and the paddy was sold to women in villages to produce rice, and they earned profits by value addition. More than 90% of the Gemidiriya village groups maintain their accounts with BoC branches, he said.
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Imperator
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 19 May 2008 04:54:57 GMT Report for Abuse
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ethics and values promoted by banks on the banking and credit system have contributed to its success.
Can't say the same about Aussie banks. Guess our guys aren't that bad after all. |
Gaja
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19 May 2008 04:56:44 GMT Report for Abuse
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Imperator,
Guess our guys aren't that bad after all.
You mean you are not an Aussie?
Gaja |
Magnum357
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 19 May 2008 07:05:16 GMT Report for Abuse
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The sharks get away it's only the sprats who get caught. For an example Mihin Air which is in default of close to a billion rupees gets away with even being granted more loans by none other than the BoC itself, but the average 'mudalali' in default of a few lakhs ends up having his properties sold to recover the losses!
Edited By - Magnum357 - 19 May 2008 07:06:45 GMT |
raigamakolla
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 19 May 2008 07:33:53 GMT Report for Abuse
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said BoC Chairman Dr. Gamini Wickramasinghe
Ha ha ha. Look who is talking.
Folks, read last Sunday Leader to know how the above man helped himself to with bank's money. |
Gaja
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19 May 2008 07:46:14 GMT Report for Abuse
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Magnum357,
For an example Mihin Air which is in default of close to a billion rupees gets away with even being granted more loans by none other than the BoC itself, but the average 'mudalali' in default of a few lakhs ends up having his properties sold to recover the losses
We tried to reflect what was coming for the next generation majority race. You rejected us and now it is your reality. Had you recognized our leadership in these matters - the younger generation of majority race would have been saved this pain and loss. This is why Equal Opportunity is essential in a democracy which does not wait for time.
love
gaja |
Magnum357
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19 May 2008 12:54:19 GMT Report for Abuse
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Had you recognized our leadership
Are you refering to that barbarian VP? |
p007
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19 May 2008 17:03:53 GMT Report for Abuse
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The biggest loan defaulters in Sri Lanka are the rich millionaires in Colombo and not the poor peasants in rural areas.
What happens to the defaulters? If the millionaires default, it should be easy enough to recover the loans. Is the BOC chairman saying that they do NOT make any attempt to recover the loans from the millionaire defaulters? If so why?
The Chairman's very brief confession raises more questions than answers. Perhaps he was deliberately brief to avoid embarrassment to himself and the Bank.
In the interests of the Bank and the country, he should say more about these millionaire defaulters and how much of the default loans are recovered and the reason/s for not recovering loans that remain in default. |
justman
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 19 May 2008 21:53:58 GMT Report for Abuse
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| This fault of the equally corrupt banks for authorizing loans to people who are not capable of honoring it,like the cronies of the politicians. |
kiora
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 20 May 2008 03:13:00 GMT Report for Abuse
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| If some one don't like the Australian banks they can take there busniess to BOC world leader in ethical banking. |
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