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Wednesday, 04 October 2017 - 19:44
Former Finance Minister’s unusual instruction to state banks revealed at Bond Commission


The heads of State Banks revealed at the Bond Commission today (04) that former Finance Minister Ravi Karunanayake instructed them to bid at low rates in the controversial Central Bank Bond issuance.

They said that state banks were compelled to incur an abrupt loss due to such action.

Seven top officials including chairmen of Bank of Ceylon, People’s Bank and National Savings Bank were testified before the Bond Commission today.

They confirmed that they were called for meetings by former Finance Minister Ravi Karunanayake on 28th of March and 30th of March in 2016 before one of the controversial bond issuances was conducted.

They said R. Paskaralingam also participated in the discussion with the other officials from the Finance Ministry and the Central Bank.

A sound recording of a discussion between the People’s Bank and the Central Bank Debt Department was also played before the Commission.

In it, the People's Bank has asked the CBSL's Debt Department not to accept bonds for higher rates, on the day of the controversial bond issuance.

However, People’s Bank Chairman Hemasiri Fernando said despite such requests, that the Central Bank accepted bids amounting to two times higher than what was published.

The chairmen of state banks also said that another meeting was called by the then Finance Minister Ravi Karunanayake on 30th of March, 2016 and instructed them again to bid at lower rates.

The former Minister had instructed to submit biddings to the value of 7.5 billion rupees by each bank.

Meanwhile, CEO of People’s Bank Wasantha Kumar told the Commission that he informed Ravi Karunanayake that the banks were compelled to bear an abrupt loss as the Central Bank did not accept their biddings at low rates.

Consequent to this type of biddings at low rates by the state banks, biddings by primary dealers have been accepted as they had put bids at higher rates.

It was revealed that Perpetual Treasuries Limited was able to acquire over 50% of the Treasury Bonds on two occasions consequent to the instruction given to the state banks by former Finance Minister Ravi Karunanayake.


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