|Tuesday, 24 June 2003|
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Having a house of our own in today's context is a dream of many. Over the years State Mortgage Bank and the National Savings Bank have granted thousands of loan facilities and assisted so many to realize their dreams. Of course loans for housing having been obtained after going through a long laid down procedure with the submission of a number of vital documents. The processing of a housing loan is a hazardous task and time consuming exercise for the banks.
The repayment of the loans extends to a period of 15 to 20 years depending on each applicant's age and repayment capacity. The monthly instalment for even a loan of Rs. 250,000 comes to a tidy sum is called an equated instalment, which is a fixed amount.
I wish to take responsibility in regard to disadvantages caused to thousands of borrowers as I have experienced this exercise personally as an ex-responsible bank officer. A renowned musician has complained to me several times with regard to this obvious discrepancy in respect of a loan of Rs. 200,000 he had obtained in 1993 from the National Savings Bank, Mt. Lavinia branch. The loan has been stretched to a maximum period of 12 years as he was 57 years of age at the time of applying for his housing loan.
His monthly equated instalment had been fixed at Rs. 3,534. He has already paid a sum of Rs. 280,000 in respect of instalments. As he had failed to pay his monthly instalment regularly he had been served notice to auction the property he is presently living in. The bank has instructed him to pay a further sum of approximately Rs. 410,000 with a concession to completely pay off the outstanding amount together with interest. In the context of these statistics for a loan of Rs. 200,000 obtained he has to pay an exorbitant sum of Rs. 700,000 to repay the loan in full before the completion of the stipulated period of the loan.
During the first five years or so on a long-term facility an unbelievable sum of interest only is recovered from the Equated Instatement. As such if an inquiry is made with regard to the amount of capital recovered the answer given is shocking to any borrower. If one fails to deposit money for the instalment of even one-month, as a bank's priority only interest is recovered from the amount deposited.
I am rather confident about what has been stated above. Those who are affected by this exercise will no doubt agree with me. Why not the Banks' Supervision Division, Supervision Department of Central Bank of Ceylon intervene into this present method. It is suggested that a careful study and scrutiny of the present operation of recovery method adopted is made to ascertain the exact position.
This should be regarded as a top priority as there are so many who are compelled to pay tidy monthly equated instalments from their meagre salaries for years, depite having other priorities to meet. I am sure a good percentage of housing loans granted are in the non performing sections of these banks owing to non payment of instalments promptly.
Taking another precise example, a borrower who has obtained a long-term housing loan of Rs. 250,000 and who has remitted Rs. 4,000 monthly from his salary is surprised to find on inquiry after three years that only a sum of approximately Rs. 3,000 only has been reduced from the capital. The entire balance amount has been recovered as the interest component.
Does this theory of fixing the instalment as Equated beneficial to the Borrower?
However, if interest is calculated for one calendar year at the prevalent rate of interest, every month a good part of the capital could be recovered from each borrower every month if the same amount is deposited. This method is more realistic and advantageous to the borrower.
SUNIL THENABADU, Mt. Lavinia
In Sri Lanka rights take precedence over duties. We are more concerned about our rights. We ignore our moral obligation to our duties. In work places a minor issue acts as a catalyst to down tools. Duties are ignored. Wild cat intermittent strikes have been the bane of this country in the not too distant past.
How many of those employed execute their duty with dedication and commitment? In departments, corporations, hospitals, schools and other public institutions do they work with honesty and sincerity?
We fight, we die for our rights. With the same zeal and ardour, do we perform our allotted tasks? Approach is indifferent and lackadaisical.
The GMOA would either send sick notes, work to rule or down tools, abandoning the patients and putting their lives in jeopardy if their demands are not met by hook or by crook.
Undergraduates would indulge in wanton destruction and vandalism of public property if the authorities fail to deliver the goods. They even deface the parapet walls and buildings of universities. The Bankmen want more like Oliver Twist. If denied, they come out en masse, ignoring their duty, obligation and response right. Give us what we demand or face the music. Let others sink or swim.
M. AZHAR DAWOOD, Dehiwela
Reference the news item appearing in the Daily News of 16th June under the above heading, I wish to make the following comments:-
(1) Most accidents occur due mainly to the following reasons:
(a) Excessive speeding.
(b) Driving under the influence of liquor.
(c) Failure to follow road rules.
(d) Inexperience (i.e. new licence holders who do not have sufficient driving experience).
(e) Other faults such as failure to keep your eyes on the road (looking here and there while driving, or talking on cell phones while driving).
(f) I am sure that very few if at all drivers over 60 years will fall into any of the above categories.
(2) It will be interesting to know the following:
(a) For the past ten years how many road mishaps have occurred?
(b) Out of these mishaps how many drivers over 60 years were involved?
(c) What were the reasons for such accidents (speeding, driving under the influence of liquor etc.).
In any event, I feel that to impose such a ceiling on the age of all drivers above 60 years is very unfair. In other countries (specially the advanced countries) do they have such a ceiling on the age of drivers? Further more, this will bring about an additional burden on the Motor Traffic Department as well as the ageing driving public.
This is a costly exercise for the licence holders as the applicant has to pay for X-rays etc at medical tests. This rule may be applicable to Heavy Vehicle Drivers, who already have such a rule compelling them to pass such a medical test every 3/4 years before their licence is renewed.
But to impose this rule on all drivers (such as owner drivers who use their own cars, for their daily travelling) seems most unfair and unwanted.
I suppose there will be more and more gentlemen drivers who will agree with me and respond.
The refutation given by Lilani Kodikara which appeared on 17.06.2003 responding previous letters on the same issue leaves much to be desired.
Firstly, she points out that if banks were robbers, they could not have survived for decades. This assumption is absolutely unwarranted as in Sri Lanka robbers have been known to survive for generations.
Secondly she misses the point raised by the writers of the previous letters in toto. The point of the letters was that the commissions / service charges/interest rates were too high, not that the banks were not necessary.
Thirdly, it is highly inappropriate to criticize the author for perceived shortcomings as is being critical about the capabilities of State Bank employees.
Fourthly, compared level by level to any other industry, the banking industry employees do, on average, earn far higher salaries than employees in the other sectors. Therefore she should check her "facts" before she goes public with them.
Fifth, with regards to the qualifications of the employees, the fact that the State employees possess better qualifications (as the writer claims they do, though that in itself is arguable) does not guarantee that the service offered to the public is better. One only needs to walk into a State owned bank, and a private bank to observe the difference.
Sixth, the fact that many foreign and indigenous Banks are run by the ex-State Bank personnel (again as claimed by the writer) does not stand as eloquent testimony to say that State employees are the best. If they were, the State banks would have kept them. It only stands as eloquent testimony to the fact that the State banks cannot recognize talent when they see it and let promising staff turn into competitors.
Seventh, the example of missing a zero (or adding a zero) is so naive that it casts severe doubt on the credibility of the argument. Any profession nowadays is stressful, needs to be speedy and accurate. The error cited can occur anywhere in the transaction chain and not necessarily in the banking section of that chain.
Finally, when all is analyzed it is rather obvious that banks in Sri Lanka are making far more profit than banks in the West or the USA.
This profit is mostly due to higher interest rates, unpardonable service charges (remember the Rs 10 charge that some banks imposed for paying utility bills until recently?), and very often, misleading the customer by not providing ALL information upfront.
Credit cards are another area where banks seem to be minting money with most consumers opting to settle with the bank as legal procedures are virtually a non-option to customers.
Banks also use other questionable methods to enrich themselves. The point of the previous letters on the same subject was that the Central Bank was the best friend of the banks and not functioning with the best interest of the public in mind which seems to be, have been lost entirely on Ms Kodikara, who has taken them as an affront on bankers in general.
CHAMAL PERERA , via e-mail
The massive aid granted to Sri Lanka undoubtedly confirms the confidence of the donor countries of the recipient, for which the Prime Minister should be highly commended.
Accordingly, let's hope that the aid without which we are unable to manage, would be utilized fully, and invested wisely, but not hastily giving the desired results, maintaining the confidence of the donors and the people, making their lives better as envisaged. In doing so, let us not forget that peace is the most essential and important ingredient in achieving same.
Regaining Sri Lanka, or for that matter possessing same as one peaceful country would depend solely on peace.
TOMMY WANIGESINGHE, Kurunegala.
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