COLOMBO: Sri Lanka’s cabinet nod has been received to instruct legal draftsman to amend certain sections of People’s Bank Act which seeks to increase the authorized share capital of the Bank and to issue debentures without government guarantee. At the cabinet meeting held yesterday, Public Enterprises Minister Kabir Hashim has submitted the proposal to amend sections of the People’s Bank Act No. 29 of 1961. Minister said new amendment that will be sent to legal draftsman seek to further strengthen the bank’s financial stability and effectiveness of operations. Accordingly, section 12 that deals with the share capital of the Bank, section 20 that deals with raising money by the issue of debentures for granting medium-term and long-term loans will be revised. Section 21 that gives government guarantee and section 43 of the act that includes regulations will also be amended. Currently, the authorized share capital of the bank is one thousand million rupees divided in to twenty million shares of fifty rupees each.
New proposal seeks to increase the authorized capital of the bank to fifty billion rupees divided into one billion shares of fifty rupees each. “Where deemed necessary in the interest of the Bank, the paid up capital of the bank may be determined from time to time by the Finance Minister by order published in the Gazette,” the new proposal showed. “The Bank may, in addition to the sums lent by the Government for the purpose of granting long term or medium term loans, raise with the approval of the Minister any sums by the issue of debentures.” Currently, the Finance Minister guarantees, the repayment of any sum due to the Bank on any loan, overdraft or other accommodation granted by the Bank with his approval.
Finance Minister also guarantees the repayment of any sum due on debentures issued under this Act. According to the current law, any sum required for the fulfillment of a guarantee with the approval of the house of representatives, should be paid out of the Consolidated Fund. Government says with the expansion and rapid growth of the People’s Bank over decades, the legal framework had to be changed to accommodate the enhanced authorized share capital. Minister Kabir Hashim said amendments will place before Parliament after obtaining the clearance of Attorney General that the provisions contained are not in consistent with the articles contained in the Constitution.
