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The People's Bank's on-going loan recovery program is aimed at overcoming its huge financial crisis and the bank has not differentiated small from the large or one community from the other in this aggressive recovery plan, Chief Executive Officer/General Manager, Derek Kelly said.

The bank has plunged into a financial crisis as a result of imprudent lending and its non-performing loans (NPLs) account for Rs. 25.4 billion as at December 31, 2001. Many of these unpaid loans have been given to political favourites.

There has been some media comment recently of the widespread advertising of mortgaged property for sale by People's Bank.

Under the parate procedure debtors are named and it has been suggested that this is very damaging to prominent members of the community. There have also been suggestions that People's Bank is discriminating against certain segments of the population.

Commenting on these allegations, Kelly said, "Twenty-five percent of the bank's advances are non performing. We have been heavily criticized for not recovering our depositors' money leading the Bank into heavy losses to the point that we now need new capital. Nobody will consider investing in People's Bank unless we can demonstrate that we can recover our debts. For this reason the Board of Directors has decided to move aggressively against our recalcitrant debtors who will not pay their debts.He added that after many reminders to, and negotiations with, these customers often over a period of several years (which have not led to realistic evidence of commitment to repay), a large number of resolutions have been approved by the Board of Directors and published in newspapers to auction the mortgaged properties of those debtors, according to the law.

Anyone reviewing these publications will be able to confirm the comprehensive but indiscriminative approach of People's Bank, such as the Bank has not differentiated small from the large or one community from the other. "What has particularly irritated these people and their traditional protectors, is that this time they have not been able to go behind politicians in order to avoid repaying their debts. Our only responsibility is to protect our depositors' money and not entertain pressing politicians," Kelly said.

At the beginning of this year the Bank has granted a moratorium of six months for small borrowers and enterprises to re-negotiate with the Bank and agree on settlement programs. Many people have taken the benefit of this and have implemented repayment programs acceptable to both parties. Those who did not make use of this opportunity were subject to recovery actions.

The Bank is bound to recover its debts as a state Bank on behalf of the Government, its owner. If People's Bank does not recover such debts it will not be able to survive and the burden will than fall on the taxpayers and the broad sections of society that we have served so faithfully for many years.

"It is the policy of the Bank to explore all realistic alternate avenues before resorting to sale of mortgaged property. In the process the Bank has been able to minimise the number of auctions through negotiated settlements," Kelly said.

Therefore the bank will continue to obtain recovery of its debts by whatever legal means are necessary without fear or favour from every defaulter irrespective of their community or "connections" and will not tolerate any interference in this process, he said.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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