Major amendment to Parate Law with new Act – Minister

Justice, Prison Affairs and Constitutional Reforms Minister Dr. Wijeyadasa Rajapakshe, PC said that there is a major amendment regarding Parate Law and a new Act on Parate Law will be brought forth.

He said that the small and medium-scale businessmen would not have faced this difficult financial situation if they had worked according to the objectives established by the Bank of Ceylon and the People’s Bank and pointed out that the law of Parate which is a Roman Dutch law, does not even exist in Rome or Holland today.

Sri Lanka’s small and medium entrepreneurs who have mortgaged or pledged their property and assets to banks and financial institutions to do their business, due to the Easter attack, the Covid pandemic and the subsequent economic crisis in the country, the Sri Lankan business community faced many serious problems. Due to the fact that thousands of businessmen who pledged their assets and took loans were unable to settle the money, banks and financial institutions took over the properties under the Parate law.

More properties are being taken over. The Sri Lankan business community has temporarily suspended the process of expropriation of their assets and properties under the Parate law, which they are currently facing, and with the aim of providing them with some legal protection, a special conference has been organized by the Association of Businessmen who have acquired and are about to acquire property under the Parate Act. Under the chairmanship of the Minister of Justice, Prison Affairs and Constitutional Reforms, President’s Counsel, Dr. Wijeyadasa Rajapakshe, with the participation of Health Minister Dr. Ramesh Pathirana, the small and medium businessmen gathered together for a special discussion themed “Anti Parate Activists Business Forum” which was held at the Jasmine Hall of the Bandaranaike Conference Hall, Colombo on Thursday (21), and a motion to repeal the Parate law was adopted.

The businessmen called for the temporary suspension of Parate Law No. 04, passed in 1990, or at least until the country reaches the economic growth rate of 4.5 percent, which was the economic growth rate before these crises in 2019.

The Minister of Justice, who expressed his opinion, said:“We are sorry for the situation faced by small and medium enterprises. We had to talk about the banking system operating in this country because the country was bankrupt. If we want to build this country, the agriculture industry, small and medium scale industrialists should get priority.

We have taken loans from the International Monetary Fund on sixteen previous occasions and used them to expand the service sector. For the seventh time, the IMF cannot be fooled. The objective of establishing the Bank of Ceylon as a state bank was to develop industries. The main purpose of establishing the People’s Bank was to develop the agriculture industry. Apart from the original objectives of establishing the People’s Bank and the Bank of Ceylon, they did so with the objective of making profits with private banks. There should be two banking systems in a country which are only development banks and commercial banks. In our country, all are commercial banks.

After Gotabaya Rajapakshe was appointed as the President in 2020, large-scale businessmen were given tax concessions. Due to the fertilizer problem, agriculture collapsed. If the Bank of Ceylon and the People’s Bank of our country had acted according to the principles established, this would not have happened to the small and medium businessmen of this country. It must be said that the Central Bank has rarely taken correct decisions regarding financial control. No action has been taken regarding the amount of 52 billion US dollars that large-scale businessmen have kept in foreign countries. There is a lot of criticism about these two main state banks in our country.

The Parate law, which is a Roman Dutch law, does not even exist in Rome today. Not even in Holland. At that time, only the Bank of Ceylon, the People’s Bank and the State Mortgage and Investment Bank were able to operate under the Parate law. Financial institutions and banks mushroomed with the free economy. This, Parate Law is misused.

Relatives of the heads of some banks became the owners of the properties auctioned under the Parate law. The banking system should also be protected. Only if the customers are strong, the banking system will be strong. Due to the problem of banks, electricity bills, tax policy, there is a lot of pressure on the businessmen.

No government in this country had a tax policy. Because of that, businessmen are not willing to invest. A decision has to be made about Parate law. A major amendment should be made regarding this law.”

The Minister further said that after preparing the recommendations and getting the approval of the Cabinet of Ministers, he hopes to pass the Act in the Parliament and bring a new Act on Parate Law.Industry and Health Minister Dr.Ramesh Pathirana said:“We have a good understanding of the problems faced by small and medium businessmen. Entrepreneurs as a country have faced tragedy. This situation is not an issue created by you small and medium entrepreneurs. We are working to get the approval of the Cabinet of Ministers and the Parliament to support you by giving a break to Parate Law for two years. If the entrepreneur is not protected in this country, a stable economy cannot be built. We must understand it.”

Dr.Ramesh Pathirana also said that measures should be taken to protect the banking system and the entrepreneur.

The President’s Counsel, Mayura Gunawamsa, expressed his views and said that the Parate law has put a lot of pressure on small and medium scale entrepreneurs. In 1990, through the Special Provisions Act for Debt Recovery No. 04 of 1990, the jurisdiction of the Court in connection with the loan secured by the property was given to the banking system under Parate Law. The government has destroyed small and medium enterprises by claiming that they are the backbone of this country. The existing strictness of Parate law should be relaxed. He stated that the Central bank should act regarding the properties currently acquired under this law.Entrepreneurs who have mortgaged their properties and taken loans from banks were given the opportunity to present their problems and entrepreneurs representing different parts of the country presented their problems.

The Chairman of the Construction Industry Council, Susantha Liyanarachchi, the Chairman of the Domestic Business Protection Council, Mahendra Perera de Silva and S.N. Raghavan, the Chairman of Private Companies expressed their opinions regarding the crisis faced by small and medium enterprises.Shasika De Silva, Vice President of Sri Lanka Trade Association, led the presentation of the problems and ideas faced by small and medium scale enterprises and said “understanding the situation faced by small and medium entrepreneurs during the Covid pandemic, Minister Rajapakshe intervened to provide a two-year grace period for repaying the loans taken from the banks, and the minister is definitely responsible for the problem faced by the entrepreneur due to the Parate law.” She also said that she is confident that solutions will be provided through mediation.

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