Auditing Samurdhi banks in new transparency drive
Sri Lanka’s Samurdhi banking system is to be regularised by bringing Samurdhi community-based banks and rural banking societies under government audit, Finance Ministry sources confirmed.
The Cabinet of Ministers at their meeting on Wednesday approved publishing a draft bill amending the Samurdhi Act No. 1 of 2013 in the Government Gazette, as revised by the Divinaguma (Amendment) Act No. 2 of 2017 and to subsequently submit the same to Parliament for its approval.
“The proposed amendments aim to bring Samurdhi community-based banks and banking societies under the purview of Government audit,” Cabinet Spokesman and Minister Dr. Nalinda Jayatissa said at weekly post-Cabinet meeting media briefing on Thursday.
He said the move is expected to strengthen financial oversight, improve transparency, and ensure greater accountability in the management of public funds within the Samurdhi welfare framework.
Originally, the Cabinet of Minister approved the proposal to proceed with the amendments on December 30, 2024 and the Attorney General has since cleared the draft bill, which was prepared by the Legal Draftsman.
This move was exclusively reported on April 28, 2024 by the Sunday Times Business revealing that “the banking system will be regularised making it difficult for corrupt officials and politicians to pilfer money from the compulsory savings of poor recipients”.
It will be upgraded to guarantee transparency and independence by implementing a credible and a practical empowerment plan to bring it under the purview of the Central Bank.
The Samurdhi bank has assets worth Rs.400 billion including the deposits of Samurdhi recipients (compulsory savings) which were invested in banks and government securities.
There are currently 1,092 Samurdhi “banks” (branches) in Sri Lanka but they are not formally recognised as banks as they do not fall under the preview of the Central Bank.
These informal banks were used exclusively as distribution points for the monthly cash transfers.
Many incidents of allegedly defrauding money from these banks with the connivance of its managers and Samurdhi development officers under the guise of poor relief programmes have been reported in the recent past.
Samurdhi funds were also taken in 2020 during the COVID-19 pandemic to provide emergency relief to vulnerable populations affected by the nationwide curfew and economic shutdown.
The government withdrew money primarily from Samurdhi banks and recipients’ savings to pay Rs. 5,000 each to over five million individuals and a sum of Rs.10,000 each grants to two million households.
The overall disbursement surpassed Rs. 50 billion, creating significant liquidity and capital adequacy issues for Samurdhi banks.
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