Business Times

NSB's flawed stock market deal prompts the government to tighten screws

By Bandula Sirimanna

The National Savings Bank (NSB)'s flawed stock market deal of purchasing a 13% stake in The Finance Co (TFC) at a highly, unrealistic price has prompted the Finance Ministry to issue a circular soon to set up investment committees at state banks and other state revenue organizations.

These committees will be run by officials tasked with making investments decisions, which would not be an entire director-board responsibility, Treasury Secretary Dr. P.B. Jayasundera told reporters on Thursday. He said that these investment committees will be empowered to make equity purchases through a defined process with exposure limits.

Dr Jayasundera has justified the investment in the stock market by long term contractual savings institutions, including the EPF. Several suggestions, including setting up good governance parameters and limiting the types of investment by banks, have been made to prevent future occurrences, similar to NSB transaction, he said. A committee appointed by the Finance Ministry secretary is continuing its investigations into the NSB-TFC share deal and the resignations of the directors at the NSB helped in their own probe in the issue, he said. He said former NSB Chairman Pradeepa Kariyawasam has sent a resignation letter citing "unfair criticism" as the reason for his decision to resign.

Sri Lanka's Postmaster General (PMG) Rohana Abeyratna has been appointed as acting chairman of the NSB It has been revealed that the board of directors had not approved the board paper on the transaction put forward by T.M.K. Bandara, NSB Additional General Manager and K. Raveendran, Deputy General Manager (Audit) at the board meeting held on April 26. It was discussed at the meeting but no decision was made, said two board members. Only four directors were needed for a quorum they added. But later when they made an inquiry from the board secretary, they came to know that the board minutes had been adjusted highlighting that it was approved by the board, a board director said.

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