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Low interest rates on fixed deposits

This refers to my letter under the above caption which appeared in the Daily News on November 29, 2010.

Inspite of the fact that majority of the banks have made enhance profits as indicated below it is a matter for regret that they continue to pay a low interest to the senior citizens although they expected some relief from the commencement of this year.

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Name of Bank Profit for the period Rs. Mn 2010 2009

People’s Bank 5,206 3,320

Bank of Ceylon 6,365 3,084

Commercial Bank 5,523 4,305

Hatton National Bank 4,464 4,352

Sampath Bank 3,303 2,098

Seylan Bank 1,229 543

DFCC Bank 6,616 1,327

National Development Bank 1,576 1,682

National Trust Bank 1,002 502

Pan Asian Bank 362 388

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Moreover according to the Budget for 2011 the Corporate Tax from Banks is reduced from 35 percent to 28 percent and the Nation Building Tax also reduced. This will result in a further increase in the profitability of the Banks.

In the circumstances I wish to appeal to the authorities concerned to intervene in this matter and ensure that all senior citizens specially those who have retired from the Corporation/Private Sector who are not entitled to a pension and who have invested a part of their terminal benefits in order to receive a monthly interest as income are paid an increased interest on their fixed deposits from the enhanced profits which the Banks continue to earn or consider paying a bonus interest which was paid from 1.1.2010 and later withdrawn in July, 2010.


Share with others

I read in the Daily News on March 26, of two famous American millionaires, who are eager to help the poor in a very effective manner, thereby persuading others in their category to follow suit.

We are fortunate to have men of their wealth and calibre, because in the midst of whom there are many apart from helping the poor, does not even bother to acknowledge there are thousands around them who go to their mats daily on empty stomachs, specially children.

Usually, men of wealth, not all, shun those who are poor, similar to the story in the Holy Bible about Lazares and the wealthy man. Under the above circumstances these two gentlemen and their spouses should be admired for their desire to help those who are less fortunate. This attitude is unique in today’s world where most men of wealth continue to accumulate more and more wealth, becoming extremely selfish.

Helping the poor would assist the government to eradicate poverty to some extent, which needs the assistance of those who are wealthy, narrowing the gap of the two categories.


Develop Wellawatte CMC quarters

The Municipal quarters of Roxy Watte, Wellawatte 480 Galle Road, Colombo 6 area housed families of those who worked at the Colombo Municipal Council (CMC). However all those employees have now retired and many are dead. Their descendants are now squatters in these quarters and they have even built structures and rented them out.

Under an act passed in Parliament (Recovery of possession of government quarters) government quarters can be recovered without lengthy court proceedings. These illegal occupants have even filed a case against the CMC. CMC lawyers should point out the act to the judge and take action to evict these squatters - who can also be charged under the public property act for causing losses to the CMC.


Increase of vehicle duty - substantial losses possible

Government’s decision of increasing the duty of vehicle import is not a bad move. But there are serious implications of the action specially to individuals who had already placed an order to import a vehicle for their personal use.

It is an increasing trend that individuals place orders by opening LC’s on their own to get the price advantage without going through a car seller. This had helped to reduce cost of a vehicle to a user. Here, an individual relying on the existing duty structure places an order to fit into his/her budget which is mostly financed by a loan that is limited to the individual’s repayment capacity.

Bank makes sure the total cost of import and the duty component is available with the importer in cash form before establishing the LC. After all this, when the duty is upwardly revised after the vehicle is shipped, the individual faces serious consequences especially when the increase is substantial. The Individual has not done anything illegal. He had only relied upon the existing mechanism to enter into a transaction which will mature in less than a month!. The individual has no option to cancel the order if the total cost exceeds his capacity.

The recent increase especially on hybrid vehicles had caused substantial consequences to such individuals as the increase has gone up to as high as 163 percent increase of the existing duty (38 percent to 100 percent). For an example if the existing duty is Rs 1.5mn., new duty will be approximately Rs 3.9mn, an increase of Rs 2.4mn! One can imagine the plight of an individual who needs to find another Rs 2.4mn to clear the vehicle!.

He did not do anything wrong. He only placed an order to import a relatively economical vehicle which is environmental friendly as acknowledged by the government.

So it is obvious that the government’s good intention to increase vehicle duty will not achieve its goal (all policy decisions should finally benefit the General Public) if justice is not done especially to the individuals who relied upon the existing mechanism to import a vehicle of a category that was encouraged by the government few months ago. By allowing such importers who had opened LC before the date of duty hike to clear through the old duty structure the government is not losing its planned revenue as it can anyway recover the duty that was applicable on the date of opening the LC.

The very reason to decrease the duty in 2010 was to gain from high volumes. Therefore the fact that even large volumes of vehicles are pending clearance is not a justifiable reason to apply new duty on such vehicles. Of course one can say this is a good opportunity to collect substantial revenue for the government which I am sure is a strategy of an opportunist than a responsible government.

If the government has concerns that people will misuse this by backdating the LC, the same can be verified with Central Bank as Banks have already reported LCs opened before the duty hike to Central Bank which is verifiable.

We still believe the Government will pay due attention to this situation which can cause multiple issues like vehicles getting delayed in the harbour not being able to clear due to financial issues and other issues faced by Banks due to increase in the cost of import.

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