Two state banks, the Bank of Ceylon (BOC) and the National Savings Bank (NSB) were recently directed by the authorities to pump Rs.36. 54 billion to the Sir John Kotelawala Defence University under a Treasury guarantee, a Finance Ministry report revealed. The move will risk the government’s contingency liability as the ability of the Kotelawala [...]

Business Times

Kotelawala Uni gets over Rs.36 bn from BOC, NSB

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Two state banks, the Bank of Ceylon (BOC) and the National Savings Bank (NSB) were recently directed by the authorities to pump Rs.36. 54 billion to the Sir John Kotelawala Defence University under a Treasury guarantee, a Finance Ministry report revealed.

The move will risk the government’s contingency liability as the ability of the Kotelawala Defence University to repay the loan was doubtful, economic experts warned.

A Treasury guarantee permits the government to ensure a loan from a bank or other lender to a state corporation or private entity without providing cash through the budget as a direct allocation in capital or recurrent expenditure, they said.

Of this amount a sum of Rs.35.07 billion was provided by the NSB and Rs.835 million by the BOC.

This financial facility has been granted at a time when the Kotelawala Defence University (KDU) is undergoing a transformation to a national university amidst public protests.

Unlike other state universities, KDU will be a fee-levying university and will have the powers to recognise and give accreditation to other degree awarding universities as well.

The Finance Ministry said that it has increased Treasury guarantees to 15 percent of Gross Domestic Product (GDP) last year from 10 percent with parliamentary approval.

This has allowed 23 banks and financial institutions to disburse loan facilities amounting to Rs. 1434.7 billion among 67 institutions including the KDU, the report divulged.

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