CB Governor spotlights Parate Law for maintaining banking system’s stability

Safeguards funds of depositors:
Over 80% of Banks’ liabilities are public deposits:
Mere 0.7% of overall outstanding loan value paid by banks:

Central Bank (CB) Governor Dr. Nandal Weerasinghe yesterday emphasized the crucial role of the Parate Law in maintaining stability within the banking system and safeguarding the funds of depositors.

Dr. Weerasinghe stated that the banking system and the depositors are impacted when loans, which are provided for industries through public deposits, are not repaid.

During a press conference held at the Central Bank yesterday, Dr. Weerasinghe stated that the banking system’s total liabilities amount to Rs. 16 trillion. It was further highlighted that 81 percent of these liabilities consists of public deposits, while shareholders contribute seven percent.

“Parate Law is implemented to address individuals who avoid repaying their loans, and it is not intended for those who fulfill their loan obligations appropriately,” Dr. Weerasinghe stressed. He stated that individuals who avoid repaying loans have formed an organized group and are urging the authorities to cease the implementation of Parate execution.

“If the depositors are prepared to accept the loss, there will be no problem. Alternatively, the bank will need to limit the approval of loans,” he added.

Dr. Weerasinghe stated that the implementation of Parate Law has been limited to a mere 557 individuals for the past 11 months. The total worth of these loans amounts to only Rs. 38 billion, accounting for a mere 0.7 percent of the overall outstanding loan value. In response to inquiries regarding the VAT tax hike, the Central Bank Governor clarified that the Central Bank does not possess the authority to provide explanations or clarifications on tax matters.

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