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Monday June 3rd, 2024

Sri Lanka banks asked to set up business revival units by May

ECONOMYNEXT – Sri Lanka’s banks have been asked by the central bank to set up business revival units to help restructure debt of troubled borrowers who have a chance of recovery, starting from May 2024.

“The challenging macroeconomic conditions prevailed during the recent years have led to disrupting the income generating activities of businesses, adversely impacting the ability of borrowers to duly repay their loans and thereby impairing the recovery process of licensed banks,” the central bank said.

“Thus, the setting up of business recovery units is considered imperative to assist both performing and non-performing borrowers of licensed banks whose businesses are fundamentally viable to revive.”

Licensed banks have to set up BRUs by mid-May 2024 and fully comply with the guidelines by July 01.

“The enhanced scope of proposed business recovery units will facilitate sustainable revival of viable businesses affected by the extraordinary macroeconomic conditions and ensure the proper handling of the increased impaired assets of licensed banks,” the central bank said.

“The Central Bank sought relevant stakeholder views including the banking industry and the Chamber of Commerce, when formulating these guidelines.”

The salient features of BRUs are as follows:

a. Licensed banks are required to have robust business revival and rehabilitation policies
and procedures to support revival of businesses.

b. Large banks with more than 50 branches, may consider establishing BRUs at large
branches/regional offices of banks, in order to support revival of businesses of affected
borrowers more effectively and efficiently.

c. Fundamental viability of a business is a key factor for the consideration of business
revival by a licensed bank. In the viability assessment, both financial and non-financial
indicators are taken into consideration.

d. Borrower’s continuous cooperation will be critical for the process of reviving a stressed
business.

e. The business can be revived through both financial and operational restructuring tools
and processes. The selection of appropriate set of revival tools is subject to a mutual
agreement of parties involving in the revival process.

f. Corporate borrowers who have outstanding credit facilities at multiple banks may agree
on a “Corporate Workout Framework” on a voluntary and mutually agreeable basis,
without the court intervention, to address financial and/ or business distress faced by
them. For this purpose, a “Corporate” is defined as a business with an annual turnover
above Rs. 1 bn, as per the audited financial statements, or cummulative outstanding credit
facilities granted by licensed banks are equal to or more than Rs. 250 mn.

g. Licensed banks are required to establish BRUs by mid-May 2024, and be fully compliant
with the requirements of the Circular by 01 July 2024.

Related story
Sri Lanka banks to set up business revival units for troubled borrowers: central bank

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Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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