The growing emphasis on profit orientation and the race to register the “highest profit ever” in state owned and other banks in Sri Lanka is a phenomenon that, in the author’s view, has developed alongside the increasing influence of the International Monetary Fund (IMF) and the World Bank on Sri Lanka’s financial sector over the past three decades.
The question that must now be asked is whether the relentless pursuit of record profits is truly serving the national purpose for which state-owned banks were established.
In the People’s Bank, one of the developments that critics associate with the beginning of this culture was the introduction of an incentive bonus scheme during the tenure of General Manager Derrick J. Kelly, who was appointed in 2001. According to accounts circulated by former employees and critics of the bank’s restructuring process, the scheme was intended to motivate executives to achieve enhanced targets.
Kelly, a British national who had previously worked in international banking, was subsequently removed from his position by the government in 2005 amid allegations of mismanagement and corruption. These allegations were reportedly brought to the attention of the then Treasury Secretary, Dr. P. B. Jayasundera, by members of the bank’s staff.
The wider restructuring of People’s Bank during this period also remains controversial. Critics have alleged that external consultants brought in under the banner of restructuring exercised considerable influence over the bank’s administration and management systems. Questions have also been raised about whether some of these appointments were made on the basis of banking expertise and qualifications.
Subsequent controversies involving the banking and financial sectors—including allegations relating to bond transactions, foreign-exchange hedging, People’s Leasing and digitalisation projects—have further contributed to public debate about governance, accountability and the consequences of financial-sector reforms.
These matters deserve proper investigation based on documentary evidence rather than political influence or institutional silence. Where allegations have been made, those responsible should be given the opportunity to respond, while credible evidence should be independently examined.
Only 20% of the Bank’s liquid money is loaned for development & similar activities while
63% of the money is used for earning incomes for the Bank [and NOT for any specific expansion of
production sectors of the economy.] in non – risk, safe areas of lending to the government itself.
Notwithstanding this, the Corporate Executives claimed that they have “laboured” to earn
high profits and claim 5 months salary as “incentive bonus” amounting to about Rs 4 million each, in
addition to a two months’ annual bonus of Rs. 1.6 million, bagging 17 months salary for 12 months
of work.
Claiming “highest profit ever” of Rs. 120.8 billion, the Corporate Management and the
government appointed Chairman has not revealed that legal liabilities of the BOC for the year 2025
far exceeds the Profit After Tax of Rs. 76,000 m, as indicated above.
The Corporate Executives also enjoy, transport provided by the Bank in BYD luxuary
vehicles, a package of expensive other privileges and an unparalleled fortune of getting their salaries
and salary structures increased by about 40%, every 3 years plus Provident Fund Balance of over
Rs. 100 Million at retirement, together with a pension that is the highest in the entire public sector!
The celebration of “highest profit” is rooted in highly immoral, private greed for money, and
can never be considered a reward for good performance. This cancer continues to cripple the state
owned banks, which despite these bogus celebrations, of their political Chairmen and mercenary
CEOs, will be, sooner than later, mired in cesspools of financial bankruptcy and labeled “no longer
being viable” and “therefore to be liquidated” status. In 1992, such an announcement was made in
parliament by the then Prime Minister Mr. D.B. Wijetunga, who stated “state banks are insolvent.”
Public confidence in a bank does not arise out of Balance sheets. Confidence is an emotion,
not a product of intellectual or factual deliberation.
The genesis of the People’s Bank and its rapid expansion as a parallel giant to the older Bank
of Ceylon teaches us a fascinating story of confidence building by the pioneers of the People’s Bank.
The pioneering bankers of the People’s Bank, the matchless entrepreneur Vincent Subasinghe
as Chairman and Wilmar Solomons as General Manager (from BOC) commenced business in
veritable rural shacks. They recruited Sinhala-speaking rural youth, dressed in cheap white cotton,
to man these rural “outlets”. The majority of our people in Sri Lanka are Sinhala-speaking rural folk,
and the banker-customer relationship that was fostered, flowered profusely with the employees’
rapport with the rural masses, whose language and idiom and their ethos struck a harmonious
rhythm blended with the pulse of the rural people. Vincent Subasinghe introduced the Sinhala cheque,
the Sinhala signature and the Sinhala correspondence to cement the relationship to an unfailing
confidence and an unimpeachable trust. “Vishwasā Paramā Gnāti”. Trust is the greatest relationship!
Nobody ever spoke of or displayed Balance Sheets like excited schoolboys waving school report
cards.
If there is one single institution that has truly uplifted the lives of rural people in Sri Lanka,
that is the People’s Bank and we offer a fresh bunch of red roses to those dead pioneers of the
bank who dedicated themselves and sacrificed their entire lives for the task of human development.
Privatisation of the People’s Bank, a ‘la IMF, would be a great unbearable tragedy to the nation.
The impending privatisation of the state banks would, we are certain, expose to the public the
tragedy of the demise of the state-owned Banks, which were once thriving in splendour as the pride
of the Nation and which commanded unconditional confidence of the people, making significant
contributions to the people’s aspirations of nation building and dreams of පොහොසත් රටක් ලස්සන දේශයක් !
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