Public enterprises directed to invest only in 8 state banks
In the midst of the current political impasse, the Finance and Economic Affairs Ministry has directed public corporations and state owned companies to confine their investment of surplus funds to only eight state-owned banks with the aim of bringing such funds under the ministry purview.
Public enterprises in Sri Lanka are engaged in the provision of goods and services and operate in strategic sectors of the national economy.
Therefore the performances of these enterprises have a direct impact on the macroeconomic stability of the country, a senior official of the Treasury told the Business Times.
Issuing a public enterprise circular No 02 / 2018, newly appointed Treasury Secretary S. R. Attygalle noted that all boards of public corporations and state owned companies will be held personally responsible for any violation of this directive.
Previously any temporary surplus funds of public corporations and state owned companies were allowed to invest in call deposits, short term deposits, Treasury Bills, fixed deposits or any other investment funds with the concurrence of the Minister of Finance in terms of Sec. 11 of the Finance Act, No. 38 of 1971.
Approval for such anticipated investments should be obtained at the beginning of the financial year.
No investment shall be made by public enterprises in subsidiaries, associates or other entities, without the concurrence of the Minister of Finance.
The circular highlighted that investments of the funds of public enterprises are being made in entities that has not been approved by the Treasury and without following a proper due diligence process.
Under these circumstances public corporations and state owned companies have been directed to invest their surplus funds in Bank of Ceylon, People’s Bank, National Savings Bank, State Mortgage and Investment Bank, Regional Development Bank, Housing Development Finance Corporation Bank Ltd, Lankaputhra Development Bank, Sri Lanka Savings and their subsidiaries.