National Microfinance Study of Sri Lanka: Survey of Practices and ...

The RDBs were re-structured in 1998 and consolidated into 6 Regional Banks the
restructuring involved giving the RDBs more autonomous management and a
broader ownership base and shareholder appointed board members, although the
Chairman is still government appointed and open to political capture. 14
Since restructuring the banks have become profitable (although marginally in
many cases). In the year 2000, total loans disbursement was estimated at SLR
4,043 million. Self-reported data indicated that total loans outstanding as of
December 31, 2000 was SLR 5,244 million. The total loan portfolio of the RDBs
grew by SLR 697 million, an increase of 21 percent and savings grew by a
massive SLR 1,427 million to SLR 3,937 a growth rate of 40 percent in one year.
Personal guarantees from customers of the bank or immovable property is used as
collateral for loans with interest rates varying between 12% and 27% dependent
on the type of activity and degree of subsidy.
In the year 2000, the majority of loans bore interest rates between 18 and 22 %,
on a declining balance basis. Loans are classified as non-performing after 3
months and subject to age analysis. Adequate provision is made for nonperforming
loans. The value of non performing loans at the end of the year 2000
was high with Ruhunu, Uva and Wayamba at over SLR200 million and
Sabaragamuwa and Rajarata having a non-performing loan portfolio of over
SLR100 million.
Table 23 Profits of the RDBs, for the year ended December 31, 2001
RDB
Profit
(SLR Million)
Ruhunu 73.6
Wayamba 35.5
Rajarata 18.7
Sabaragamuwa 14.2
Kandurata 13.2
Uva 2.2
________________________
Source: CBSL 2001
Comment [SPD1]: How? Is ther is risk r\fund?
14 The Bank of Ceylon, the Peoples Bank, the National Savings Bank and Employers Provident all
became shareholders in addition to Central Bank.
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