- Says NPL levels on par with any other bank
- Industry average between 6-7%
The State-owned People’s Bank has categorically denied speculation that it is writing off certain Non-Performing Loans (NPLs), claiming that it has instead commenced a loan recovery process by initiating legal action in relation to certain borrowers while conducting negotiations with others.
Speaking to The Sunday Morning Business, a high-ranking official from People’s Bank emphatically denied the statements expressed on social media platforms regarding its NPL write-offs, stating that incurring NPLs was a routine part of the banking industry and something that all banks experienced.
However, he claimed that none of these loans had been written off as alleged by certain individuals and that they had in fact commenced the loan recovery process, under which legal action had been instituted in relation to certain borrowers whilst negotiations were ongoing with others.
Elaborating further, he stated: “Our NPL levels are on par with any other bank in the industry. It’s a normal practice for loans to be classified as NPLs and for certain loans to be taken out of the NPL classification.”
He further stated that the People’s Bank’s NPL ratio matched the industry average, which was around 6-7%.
Commenting further, he reiterated that none of the People’s Bank’s top 10 NPLs, which had received significant public scrutiny in the aftermath of the Committee on Public Enterprises (COPE) revelations in May 2022, had been written off and that currently, legal action was being pursued to recover these.
Responding to a query regarding the money owed by the Ceylon Petroleum Corporation (CPC) to the People’s Bank, he revealed that the $ 2.5 billion owed by the CPC to the two State banks had been taken over by the Treasury in accordance with the 2023 Budget decision. According to him, negotiations are currently ongoing with the Treasury regarding the payback plan.
During the COPE meeting of May 2022, it was revealed that the top 10 NPLs of the 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, then COPE Chairman Prof. Charitha Herath directed the Chairman of the People’s Bank to submit a full report containing the details of the private companies that had been granted loans to the tune of Rs. 54 billion that had been listed as NPLs, how such loans were evaluated, and the persons responsible for approving such loans.