Holistic approach needed to debt recovery

Sarath MALALASEKERA

IMPORTANT COMPONENT: Debt recovery is an important component of the economy. Modern economy centres around commercial transactions which today is based on credit.

Most transactions, national or international are dependent upon credit, said President’s Counsel Romesh de Silva delivering a lecture at the “Corporate Law Conference” held at the Colombo Hilton recently.

Letters of Credit, Credit Cards are some of such methods by which transactions are entered into. Paperless transactions will soon be the order of the day and in these circumstances for modern commerce, whether national or international, recovery of debt is an important link in the chain of economic transactions.

The country’s economy centers around and depends upon the proper circulation of money and goods. National and international economy therefore depends upon the proper regulation of transactions between human beings and nations.

In this context the possible weak link in Sri Lanka is the recovery of debt: This in turn leads to inflation, higher rates of interest, less money available for development and a score of other problems.

It is in these circumstances that this problem has been examined and addressed by several groups of people and institutions. As a result of that several new pieces of legislation were enacted.

The Debt Recovery Legislation comprised three new Acts and amendments to other Acts, all of which were considered necessary to give effect to the recovery of loans without delay. The main amendments to the law are found in Act No.5:2 of 1990, 3 of 1990, 4 of 1990 and 6 of 1990.

These Acts (in the Bill stage) were referred to the Supreme Court in terms of Article 122 91)(b) of the constitution for special determination of that court.

These Acts even prior to Bill stage were the subject of study by several groups. The more important reports and articles encountered in my research are set out in the Annexed report.

In the aforesaid circumstances it is of the paramount importance that a holistic approach be adopted to improve the recovery of debts.

The solution must take into consideration - social, political, economic realities; take into consideration the culture of the country. Without a holistic approach being taken into cosideration with the full circumstances there can be no serious improvement in the recovery of debts.