CBSL governor explains why Parate Law suspension ‘not good’ for credit supply
March 26, 2024 01:51 pm
The Governor of Central Bank of Sri Lanka (CBSL), Dr. Nandalal Weerasinghe on Tuesday (March 26), asserted that he would not resign over the controversy surrounding the salary increase.
During the Q&A session of the special media briefing convened at the CBSL to present the second Monetary Policy Review of 2024, the Governor spoke of his duty towards his employees as the head of the institution.
Speaking further, he commented that the Central Bank’s duty towards the country includes implementation of the monetary policy, and maintaining the stability of the banking system under the CBSL Act, adding that “as the head of the institution, I have a separate duty towards my staff members.”
Responding to media queries, Dr. Weerasinghe underscored that it is the responsibility of institutions, both public and private, to ‘look after’ their employees, within their legal framework and capacity, at times like these.
He also went on to ask if an institution should wait until the economic crisis is over to provide some relief to its employees. “How long should the Central Bank wait to increase the salaries?”
Speaking about the ‘substantial’ amount of salary increase given to the CBSL employees that raised eyebrows, the governor went on to explain that the central bank is allowed to increase salaries once every three years.
Commenting on the bank’s accountability to parliament, the Governor said the senior management and professionals of CBSL made a collective decision to consider a revision to their increased salaries.
In response to a question on the suspension of Parate Law, Dr. Weerasinghe said the move ‘is not good’ for credit supply and will make it difficult for small- and medium-sized enterprises (SMEs) to obtain loans.
He explained that the commercial banks would be more cautious and show reluctance to lend money if they were faced with restrictions when recovering the money they have lent.
“That is why our position has been that the debt recovery process should be improved further without suspending [the Parate Law].” However, the government has taken a decision to suspend the Parate executions for 6 months he said further, expressing hopes that this would not have a significant impact.
