CoPF approves, subject to conditions, the bill to suspend the “parate law” until December 15

The Committee on Public Finance (CoPF) has approved, subject to conditions, the Recovery of Loans by Banks (Special Provisions) (Amendment) Bill which was amended to facilitate legal provisions for the suspension of Parate Law until December 15 2024. Accordingly, the banks’ practice of acquiring properties of whose loans are yet to be paid off will be suspended until December 15 and the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 will be amended to facilitate the necessary legal provisions.

The approval was given when the Committee on Public Finance met in Parliament recently (Apr. 30) under the chairmanship of Member of Parliament Dr. Harsha De Silva.

Officials representing the Ministry of Finance said that they hope to provide temporary relief to the creditors. Accordingly, the committee questioned the officials what action will be taken in this regard after December 15. Thus, the officials present failed to give a clear answer in this regard and the committee recommended to provide a road map for the actions to be taken after December 15 to those subject to Parate Law.

Also, the committee recommended that all the parties who have done business with the banks subject to Parate Law should be given a fair opportunity to negotiate with the banks.

The committee also questioned the officials about the distribution of loans under the Parate Law. The chair of the committee inquired about the manner in which the micro, small scale and medium scale enterprises in particular have received loans under this law and the criteria under which they are classified. The officials did not have the correct data about this and the chair of the committee instructed the officials to provide that data to the committee.

The committee also inquired the percentage of the sectors that were most affected. Furthermore, the committee asked the officials to provide data on the implementation of the Parate Law in other periods compared to the specific period in which there was an economic recession due to the impact of the corona virus in 2020, 2021 and 2022. The officials present mentioned that the data on this matter this will be presented to the committee in the future.

Meanwhile, the committee has also given its approval for the orders under the Foreign Exchange Act No. 12 of 2017 and the regulations under the Sri Lanka Securities and Exchange Commission Act No. 19 of 2021. Also, the committee approved the regulations under the Import and Export (Control) Act No. 1 of 1969.

State Minister. (Dr.) Suren Raghavan, Members of Parliament Hon. Premnath C. Dolawatta and Hon. Madhura Withanage participated in this committee.

Officials representing several government institutions including the Ministry of Finance, Economic Stabilization and National Policy, the Auditor General’s Department, the Central Bank of Sri Lanka, and Sri Lanka Customs were present.