The Cabinet of Ministers has approved a proposal to restructure the Sri Lanka Housing Development Finance Corporation Bank and the State Mortgage and Investment Bank, in a move aimed at ensuring financial stability and safeguarding depositor interests.
The proposal, presented by the President, involves transferring the government’s shares in the Sri Lanka Housing Development Finance Corporation Bank to the Bank of Ceylon (BOC), allowing it to operate as a subsidiary of BOC.
Similarly, all shares of the State Mortgage and Investment Bank will be acquired by People’s Bank, under which it will continue as a subsidiary.
Both institutions are licensed specialized banks focused on providing housing-related financial services but have struggled to maintain viability due to limited deposit-raising capacity, weak profitability, and failure to meet capital adequacy requirements, according to the Central Bank of Sri Lanka.
The Housing Development Finance Corporation Bank was established under Act No. 7 of 1997 and is listed on the Colombo Stock Exchange. The State Mortgage and Investment Bank was formed under Act No. 13 of 1975 and is fully state-owned.
The restructuring aims to integrate these smaller banks into stronger state-owned financial institutions, supporting long-term sector stability and enhancing protection for depositors. (Newswire)
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