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Top 10 Non-Performing Loans: People’s Bank seizes collateralised assets 

31 Jul 2022

  • Litigation instituted against borrowers: Bank Chairman
By Shenal Fernando The State-owned People’s Bank has seized several collateralised assets as part of the loan recovery process related to the bank’s top 10 Non-Performing Loans (NPLs), which received significant public scrutiny in the aftermath of the Committee on Public Enterprises (COPE) revelations in May 2022. Speaking to The Sunday Morning Business, People’s Bank Chairman Sujeewa Rajapakse disclosed that the bank had already commenced the recovery process of these top 10 NPLs and had already seized several collateralised assets via parate execution. He further said that the bank had instituted litigation against the respective borrowers in order to recover all remaining amounts.    Elaborating further, he stated: “It is our responsibility to recover these amounts that have fallen due. If there are assets against those loans, we will definitely go for parate execution. A parate execution involves the bank taking over the asset without wasting time in litigation and publicly auctioning the asset. If there are no takers, we will take over the asset in the name of People’s Bank as we are entitled to do so under CBSL guidelines.” With regard to the NPLs that do not involve collateral, he stated: “The process of recovering these due amounts through litigation is usually a long process. When we institute the matter in courts, borrowers will seek injunctions and seek to delay the recovery process.” However, he clarified that these enterprises, which were much publicised following the COPE meeting, had not been written off and that they had merely been classified as NPLs in accordance with accounting standards and guidelines of the Central Bank of Sri Lanka (CBSL), which require the bank to make such provisions. During the COPE meeting of May 2022, it was revealed that the loans of the top 10 NPLs of People’s Bank amounted to a total of Rs. 54.5 billion in 2021, representing a 62.2% increase compared to the total of Rs. 32.5 billion recorded in 2017. According to the information revealed during the COPE meeting, the top 10 borrowers who defaulted on loans and became NPLs are Yashoda Group, CML-MTD Group, Mihin Lanka (Pvt) Ltd., W.M. Mendis and Co. Ltd., Huravee International (Pvt) Ltd., Daya Apparel Group, Nawaloka Group, Good Fellows (Pvt) Ltd., Rican Lanka (Pvt) Ltd., and Grayline Express (Pvt) Ltd. Following the public outcry regarding the bank’s NPL portfolio, COPE Chairman Prof. Charitha Herath directed the Chairman of People’s Bank to submit a full report giving the details of the private companies that had been granted loans to the tune of Rs. 54 billion that are currently listed as NPLs, how such loans were evaluated, and the persons responsible for approving such loans.  


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